Sony to Post First Annual Loss in 14 Years
Japanese electronics and entertainment company Sony Corp. reports its fiscal fourth quarter and full year earnings on Thursday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Sony has forecast its first net loss in 14 years for the fiscal year ended March 31. Among major Japanese exporters, the Tokyo-based maker of the Walkman player and PlayStation 3 game machine is no exception in being battered by the global slowdown. The soaring yen, which reduces the value of overseas earnings, and the dropping prices of gadgets have added to the damage. Sony’s Chief Executive Howard Stringer took on the presidency as well recently to center power and be more decisive in restructuring its core electronics business. He also announced a young management team, including Kazuo Hirai, who heads the gaming unit, to better coordinate Sony’s sprawling operations spanning electronics, games, movies and semiconductors. The fiscal year ended March would mark the first time Sony has slid into red ink from troubles in its electronics business. Last time it sank into a net loss, for the fiscal year ending March 1995, its movie division, marred by box office flops and lax cost controls, was to blame.
BY THE NUMBERS: Sony expects a 150 billion yen ($1.5 billion) net loss for the fiscal year ended March 31, a reversal from 369.4 billion yen profit the previous year. It had originally expected a 150 billion yen profit. Analysts surveyed by Thomson Reuters are forecasting a 174 billion yen loss for the fiscal year through March. Sony is projecting a 13 percent drop in yearly sales to 7.7 trillion yen compared with the previous year.
ANALYST TAKE: Kazuharu Miura, analyst with Daiwa Institute of Research in Tokyo, says a quick turnaround is likely difficult for Sony because of the massive losses being racked up for the year just ended. “It will be difficult to reverse all that red ink into the black in a scope of a year,” he said. Miura said he is still waiting on what the new management team announces later this year in terms of concrete plan and strategy. Hopes lie in taking advantage of the PlayStation 3 and PlayStation Portable businesses as that’s one main way Sony can hope to be different from, and better than, its many global rivals, he said.
WHAT’S AHEAD: Sony has promised to come up with turnaround plans under the new management team that took over the leadership in April. It has already announced thousands of job cuts, including shutting about 10 percent of its 57 plants globally. But Stringer and others have yet to announce specifics, such as a fresh technology to reclaim Sony’s stardom in the rapidly globalizing electronics industry. Symbolic of Sony’s troubles: falling behind Apple Inc.‘s iPod in portable digital music players in recent years.
STOCK PERFORMANCE: Sony shares closed Monday down 40 yen, or 1.5 percent, at 2,695 yen in Tokyo. They have lost nearly half their value over the past year.
5/11/2009 4:15 AM YURI KAGEYAMA AP Business Writer TOJYO