Sony Corp yesterday said it would report a bigger-than-expected annual loss, blaming costs tied to its exit from the personal computer (PC) business, as the once-mighty firm undergoes a painful restructuring.
The Japanese electronics giant said it would book a ¥130 billion net loss (US$1.27 billion) in the latest fiscal year to March, while it slashed its operating earnings outlook.
The figure is worse than a ¥110 billion net loss forecast just three months ago, when Sony also announced it would cut 5,000 jobs in its struggling computer and television units.
The move came after Moody’s Investors Service downgraded its credit rating on Sony to junk, saying the maker of Bravia televisions and PlayStation game consoles had more work to do in repairing its battered balance sheet.
On Thursday, Sony said it now expected to record ¥30 billion in additional expenses owing to its move out of PCs, and ¥25 billion in impairment charges tied to its overseas production of Blu-ray discs, DVDs and CDs. Sony reports its financial results later this month.
“Primarily due to demand for physical media contracting faster than anticipated, mainly in the European region, the future profitability of the disc manufacturing business has been revised,” it said.
Operating profit in the latest fiscal year would be down 89 percent from the previous year, although sales were expected to jump about 14 percent to ¥7.77 trillion, it said.
PC sales got worse after its February profit warning and “consequently, [the firm] expects to record write-downs for excess components in inventory and accrual of expenses to compensate suppliers for unused components ordered for Sony’s spring PC lineup,” Sony said.
“In addition, certain restructuring charges are expected to be recorded ahead of schedule,” it added.
Sony, which is a small player in the global PC market, is selling its Vaio-brand PC division to a Japanese investment fund as it looks to concentrate on its lineup of smartphones and tablets.
After suffering four years of losses, Sony crept back into the black in the previous fiscal year — although that was mostly due to a weak yen and asset sales, including the firm’s US headquarters in Manhattan.
Despite its high-profile struggles, Sony has seen buoyant sales of its Xperia smartphone and record demand for its new PlayStation 4 console. An entertainment arm, which includes a Hollywood studio, and a little-known insurance business also remain profitable.
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