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Wed, Jan 14, 2009 - Page 10 News List

Sony, Toshiba shares drop on reports of annual losses

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Customers look at Sony Corp TVs in an electronics store in downtown Tokyo, Japan, yesterday. With demand for flat-screen TVs and other electronics down, along with profit margins shrunk by a strong yen, Sony is expected to post a group operating loss of about US$1.1 billion in the year ending on March 31.

PHOTO: EPA

Sony Corp and Toshiba Corp fell in Tokyo trading after media reports the companies would record operating losses this fiscal year because of worsening electronics and chip operations.

Sony tumbled 8.9 percent to close at ¥2,000 on the Tokyo Stock Exchange, its steepest decline since Nov. 6.

Toshiba fell 8.6 percent to ¥385, the biggest drop since Oct. 24. The benchmark Nikkei 225 Stock Average slid 4.8 percent.

Falling sales of electronics including televisions in North America and Europe could push Sony’s operating loss to about ¥100 billion (US$1.1 billion) in the 12 months ending on March 31, the Nikkei Shimbun reported yesterday, without citing anyone.

The deficit, Sony’s first from operations in 14 years, compares with a ¥200 billion profit the company forecast in October.

“The numbers look about right when one considers the severity of the sales slump since October” at Sony, said Kazuharu Miura, an analyst at Daiwa Institute of Research Ltd in Tokyo.

Miura has a “neutral” rating on Sony.

Sony said in a statement to the Tokyo Stock Exchange that the forecast was not based on any announcement by the company and declined further comment.

Falling sales and the yen’s gains against the US dollar forced Sony last month to announce plans to cut 16,000 positions and curb investment in its mainstay electronics business by 30 percent from an original plan.

Sony president Ryoji Chubachi in an interview on Jan. 6 described the environment for year-end sales as “severe” and said the company could miss its 16 million unit sales target for liquid-crystal-display TVs for the year ending on March 31.

Toshiba will post its first operating loss in seven years in the 12 months to March 31 because of worsening chip operations, public broadcaster NHK reported yesterday, citing people familiar with the situation.

The deficit will be about ¥200 billion, Nikkei English News reported, without saying where it obtained the information.

“We are evaluating the impact of significant changes in our business environment, and will quickly announce any change to our earnings forecasts, if needed,” Toshiba said in a statement to the Tokyo Stock Exchange.

Toshiba in October forecast operating profit, or sales minus the cost of goods sold and administrative expenses, will decline 37 percent to ¥150 billion in the year ending on March 31.

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