Sun Microsystems posted a $1.7bn loss for its first quarter to September.
The huge hit was mainly because the maker of servers and business software wrote down the value of the company amid global economic turmoil and the slump in its stock price in the past year.
Sun had net income of $285m in the same period last year.
Jonathan Schwartz, Sun's chief executive, said, "The economic downturn continued to weigh on our customers, especially those that contribute to our traditional high-end businesses." The financial services industry has been one of Sun's big customers.
"There is a new reality in the marketplace," he said.
He hinted at more lay-offs among the company's 33,000 staff, saying that Sun understands the need to balance its costs in light of "the new economic reality".
The latest quarter's loss includes a $1.45bn charge to write down the value of past acquisitions. Without this and other one-off charges, the net loss would have been $65m.
The company's revenue dropped 7%, to $3bn, down from $3.2bn in last year's first quarter.
Revenue declined across the globe, but was especially bad in North America, where sales fell 20% among Sun's financial services customers.