Fri, Feb 07, 2014 - Page 15 News List

Sony forecasts billion-dollar loss

INCOME SLASHED:The conglomerate said that its operating income for this year would be half of what it projected last year as declining sales hit hard


A visitor plays a video game on a Sony PlayStation 4 console during a preview event at the Sony showroom in Tokyo on Saturday. Sony announced a US$1.08 billion loss as the firm struggles to capture consumer demand for smartphones and tablet computers.

Photo: Bloomberg

Sony Corp unexpectedly forecast a US$1.08 billion annual loss and is to cut 5,000 more jobs as chief executive officer Kazuo Hirai widens his restructuring plan in the face of shrinking demand for TVs and computers.

The net loss will total ¥110 billion (US$1.08 billion) in the 12 months ending March 31, the Tokyo-based company said in a statement yesterday, scrapping its revised October projection of a ¥30 billion profit. Sony will sell its personal computer business and split its TV division into a separate, wholly owned unit after saying it will lose money for a 10th straight year.

Declining sales of key products are hampering Hirai’s revival efforts as the company struggles to find new hits that will attract consumers shifting to mobile devices from Apple Inc and Samsung Electronics Co. The CEO already failed to meet his pledge to end TV losses after cutting at least 10,000 jobs previously and focusing the company on mobile devices, games and imaging products.

“Hirai lacks aggressiveness,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo. “Sony needs to produce a new field for growth in order to increase its value.”

Operating income will be ¥80 billion this year, less than half its October forecast of ¥170 billion, while the sales projection is unchanged at ¥7.7 trillion, Sony said.

Sony expects higher full-year earnings in financial services, imaging products, games and music while operating profit will fall in home entertainment and mobile products. The pictures unit will be little changed, it said.

The company cited the costs of restructuring its TV and PC units for the revision to earnings. Sony is taking charges of ¥70 billion this year, an increase of ¥20 billion from its October forecast, it said.

The world’s No. 3 TV maker kept its October sales forecast for 14 million liquid-crystal display sets after cutting it from the 15 million projected 12 months ago. TV operations will lose ¥25 billion this year, the company said.

Sony lowered its sales forecast for Xperia smartphones to 40 million units from an earlier projection of 42 million units. The company rose to No. 3 in global smartphone shipment revenue in the September quarter, according to data compiled by Bloomberg.

A bright spot for the company has been its new PlayStation 4 game console, which sold more than 4.2 million units in the first six weeks after its November release, outpacing competing machines.

Sony’s share of global TV revenue fell to 7.5 percent in the third quarter last year from 8.1 percent the previous quarter, according to NPD DisplaySearch. Sony ranked third, trailing Samsung and LG Electronics Inc.

“There’s no prospect of its TV business being profitable,” said Makoto Kikuchi, the Tokyo-based chief executive officer for Myojo Asset Management Co. “Sony’s strengths are content such as games and movies. It cannot increase profit without moving its focus from TV production to content.”

The company also reported third-quarter earnings yesterday, with net income of ¥27 billion in the three months ended on Dec. 31 amid sales of the new PlayStation 4 console and a smaller loss in the unit that makes smartphones.

The company will sell its Japanese PC business to buyout firm Japan Industrial Partners Inc, Sony said yesterday.

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