Restructuring costs sank Sony deeper into red ink for the latest quarter amid a turnaround effort under chief executive Howard Stringer, the first foreigner to head the Japanese manufacturer.
Sony Corp, which brought the world the Walkman portable player and PlayStation 2 video-game machine, reported a ¥66.5 billion (US$578 million) loss yesterday for the first quarter, worse than the ¥56.5 billion it lost the same period the previous year.
It was the fifth consecutive year that Sony racked up a loss in the final fiscal quarter -- a testament to the massive restructuring the company has been undergoing for years.
PHOTO: AFP
Quarterly sales, however, rose 8.7 percent to ¥1.85 trillion from ¥1.7 trillion the previous year, reflecting the emerging signs of a recovery led by better sales in TVs and other gadgets. But some of those gains came from a weak yen.
HEAVY BURDENS
Restructuring expenses weighed heavily on the company, costing ¥75.3 billion, mostly in the electronics sector, during the quarter, up from ¥48.6 billion for restructuring the previous year. Development costs for the PlayStation 3 also added to the losses, Sony said.
In recent years, Sony has fallen behind in portable music players such as Apple Computer Inc's iPod and in flat panel TVs, dominated by Japanese rivals like Matsushita Electric Industrial Co and Sharp Corp, as well as by Samsung Electronics Co.
Under the leadership of Welsh-born Stringer, Sony has embarked on drastic cost cuts, dropping parts of its business such as the Qualia luxury electronics lineup and Aibo entertainment robots, in an effort to turn profitable in the face of intense competition from cheaper Asian rivals.
Samsung, by contrast, has been booming, earning 1.88 trillion won (US$1.95 billion) in the same quarter.
CRUCIAL PARTNERSHIP
Sony boosted TV sales last year, especially in the US, after it began making flat-panel TVs in a partnership with Samsung, a smart business move for the company but an admission it couldn't catch up alone in liquid-crystal display technology.
Sony said it was optimistic about the future, as the growing sales of liquid-crystal display TVs start to be reflected in earnings.
For the fiscal year ended March 31, Sony marked a ¥123.6 billion profit, down 24.5 percent from ¥163.8 billion in fiscal 2004. Fiscal 2005 sales climbed 4.4 percent to ¥7.48 trillion from ¥7.2 trillion in fiscal 2004.
Both were better than Sony's forecasts. It had initially forecast a ¥10 billion loss for the fiscal year but later raised that to a ¥70 billion profit on ¥7.4 trillion sales.
Sony is forecasting a ¥130 billion profit for the fiscal year ending next March 31 up 5 percent from the fiscal year just ended, on ¥8.2 trillion sales, up 10 percent.
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