Eaton Corp. (ETN) swung to a first-quarter loss on slumping sales, and it anticipates the woes will continue.

As such, the diversified manufacturer for the automotive, aerospace and electrical industries plans more cost-cutting it slashed full-year earnings expectations and projected second-quarter results well below analysts' estimates.

Eaton now sees 2009 earnings of $2.50 to $3 a share, down from January's view of $4.20 to $5.20. The company also expects second-quarter earnings of about 25 cents a share on revenue of $3 billion to $3.1 billion. On average, analysts' surveyed by Thomson Reuters projected $1.04 a share and $3.49 billion, respectively.

Eaton and other industrial manufacturers have experienced sharp declines in market demand as customers cut spending. Companies exposed to the struggling U.S. auto industry have been hit particularly hard. Eaton said in January that first-quarter results would be hurt by auto-plant shutdowns.

In that period, the company posted a net loss of $52 million, or 30 cents a share, compared with year-earlier net income of $250 million, or $1.67 a share. Excluding acquisition-related costs, the loss would have been 22 cents. In February, the company cut its outlook to a loss of 25 cents to 35 cents.

Revenue decreased 20% to $2.81 billion. Analysts expected $3.06 billion. Gross margin fell to 22.7% from 27.6% amid the sales woes.

Under Chairman and Chief Executive Alexander Cutler, Eaton has diversified from the automotive industry and into supplying electrical and hydraulic systems to a host of industries. But the breadth of the recession has affected nearly all of its business.

Since January, all three major U.S. credit ratings agencies have cut their ratings on Eaton, citing slower-than-expected debt reduction and the slowdown in demand from many segments.

Eaton's shares closed Friday at $44.75 and were inactive premarket. The stock is down by more than half the past 10 months.

-By Kerry E. Grace and Kevin Kingsbury, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com