Sony has narrowed its full year loss forecast after posting a smaller-than-expected loss of 26.3 billion yen (equivalent to $289 million) for the quarter ended September.

The Tokyo-based company has now slashed its net loss forecast to 95 billion yen as compared with earlier forecast of 120 billion yen loss for the year ending March 2010.

Number of the PlayStation 3 machines soared to 3.2 million during the quarter, boosted by price cuts made by the company.

But, the strong yen affected the company adversely as it took 77 billion yen away from operating profit during the quarter.

Chiba-Gin Asset Management Co.'s Masatsugu Okeya said, "Sony became unattractive compared with Samsung and LG, which are gaining stronger momentum."

The company has been hacking jobs and shutting down factories in an effort to cut costs.

Prior to the announcement, shares in Sony gained 2.8 per cent to 2,785 yen in Tokyo.