The loss estimate for the financial year ending March 31, compared with a 3.87 billion yen net profit in the previous year, highlights the urgent need for the camera and medical-equipment maker to shore up its finances in the wake of the $1.7 billion fraud.

Potential investment partners attracted by Olympus's profitable endoscope business are believed to include Fujifilm Holdings, Sony Corp, Panasonic and South Korea's Samsung Electronics.

But Olympus President Shuichi Takayama has said a decision on any alliances must wait until the installation of new management after its annual shareholders' meeting in April.

For its October-December third quarter, Olympus, which holds a 70 percent share of the global market for diagnostic endoscopes, reported a 756 million yen net loss, compared with a 2.04 billion yen net profit in the same period a year earlier.

But in a sign that its core endoscope business may survive the scandal unscathed, operating profit in its medical systems business rose 7 percent year-on-year during the quarter, having recovered from disaster-related supply disruptions earlier in the year.

In December, Olympus filed five years' worth of corrected earnings statements to iron out its accounts and said that as of the end of September net assets were 46 billion yen, down from a restated 225 billion yen in March 2007. It also withdrew its forecast for an 18 billion yen net profit this business year.

The accounting scandal erupted when Olympus fired its British chief executive Michael Woodford on October 14, after he raised concerns about dubious book-keeping.

Since then, Olympus has admitted it used improper accounting to conceal massive investment losses under a scheme that began in the 1990s. It remains under investigation by law enforcement agencies in Japan, Britain and the United States.

Olympus is banking on the April 20 shareholder meeting to mark a turning point in the scandal, with at least six of its 11-member board, including president Takayama, set to resign and be replaced by shareholder vote.

The meeting is expected to be a lively one. It is the first such gathering for shareholders since the scandal wiped out about half of Olympus' market value, and Woodford himself has said he plans to attend.

On Monday, the stock finished up 0.4 percent at 1,282 yen, against a 0.6 percent rise in the benchmark Nikkei average.

(Reporting by Chris Gallagher; Editing by Alex Richardson and Michael Watson)

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