Sony Forecasts Full-Year Loss on Yen, Waning Sales in U.S.
November 02, 2011, 11:33 PM EDT
By Mariko Yasu and Naoko Fujimura
(Updates with lower sales targets in second paragraph.)
Nov. 2 (Bloomberg) — Sony Corp., Japan’s largest consumer- electronics exporter, forecast a 90 billion-yen ($1.2 billion) annual loss after slashing television sales targets and the yen reached a postwar high.
The company scrapped its prediction for a 60 billion-yen full-year profit after reporting an unexpected loss of 27 billion yen for the quarter ended Sept. 30. Sony also cuts its annual sales targets for TVs, personal computers, compact cameras and Blu-ray DVD players.
Sony’s projected fourth consecutive annual loss comes as Chairman Howard Stringer tries to revive sales amid competition from Samsung Electronics Co. and Apple Inc. The company lowered its TV sales target to 20 million units from 22 million units and said Thailand’s worst floods in almost 70 years will delay the introduction of high-end NEX and Alpha cameras, and hurt annual profit by 25 billion yen.
“Sony faces a difficult situation as the surrounding environment has been changing dramatically,” Yoshihiro Okumura, who helps manage the equivalent of $365 million at Chiba-Gin Asset Management Co. in Tokyo, said before the announcement.
“Concern about the world economy and an unprecedented level of competitiveness with South Korean and Taiwanese companies make things worse for Sony.”
Sony today sank 3.6 percent to 1,520 yen. Shares have fallen 48 percent this year, compared with a 2.3 percent gain for Samsung and a 23 percent jump for Apple.
Sony’s second-quarter loss compared with an estimated profit of 19.5 billion-yen average from a Bloomberg survey of four analysts.
The impacts from the Thailand floods have not been limited to Sony. Honda Motor Co., Japan’s third-largest carmaker, on Oct. 31 withdrew its forecasts after Thailand flooding crippled its production in Southeast Asia. Honda scrapped the forecasts as it reels from a disaster that’s inundated 10,000 factories and flooded more than 80 percent of Thailand’s provinces.
Japan’s currency earlier this week dropped from a post- World War II record against the dollar after the country intervened in the currency markets. The yen gained 13 percent against the euro during the quarter ended Sept. 30, while extending its value against the dollar by 8.3 percent. A stronger yen hurts the repatriated value of sales overseas.
Mazda Motor Corp. today predicted it will post a full-year net loss, compared with an earlier forecast for a profit in the year ending March 31, because the yen is expected to stay strong.
Sony made 30 percent of its revenue in Japan, 21 percent in Europe, 20 percent in the U.S. and 18 percent in Asia excluding Japan in the year ended March 31, according to data compiled by Bloomberg.
The company will take a 50 billion-yen charge for additional restructuring of its TV business and expects to halve the division’s operating loss in the next fiscal year before turning a profit in the year ending March 2014, according to a statement today.
Sony last month recalled 1.6 million Bravia flat-panel TVs sold worldwide since 2007 because a faulty component may cause them to melt or catch fire. The recall was voluntary and will have a negligible impact on Sony’s earnings, the company said then.
Sony, which has lost a combined 476.3 billion yen in the past seven fiscal years from its TV business, yesterday began a reorganization of the business into three groups. The business is expected to have an operating loss of 175 billion yen this year, Sony said in a statement. Sony’s management “feels a sense of crisis” after losses at the unit, Executive Deputy President Kazuo Hirai told reporters in Tokyo today.
Samsung, the world’s top TV maker, last week said its TV unit posted an operating profit of 240 billion won ($214 million), compared with a loss of 250 billion won a year earlier, helped by models featuring 3-D functionality and Web-based services. The company’s mobile-phone unit had record profit and sales in the quarter ended Sept. 30, it said.
Panasonic, the world’s biggest maker of plasma TVs, earlier this week forecast a full-year net loss of 420 billion yen, the company’s biggest in a decade, mostly because of charges for streamlining TV and chip operations. The company is suspending two Japanese plants making TV displays, it said Oct. 31.
last week, Sony agreed to buy Ericsson’s 50 percent stake in Sony Ericsson Mobile Communications AB, their London-based mobile-phone venture, for 1.05 billion euros ($1.5 billion) in cash. The deal will help Sony tap demand for smartphones and integrate the operation with its gaming and tablet offerings.
In September, the maker of Vaio laptops offered its first tablet computer, featuring a 9.4-inch LCD display as well as front and rear cameras, in a pursuit of market leader Apple. The company released another clamshell-styled tablet last month.
Sony plans to start offering its new PlayStation Vita portable game player next month in Japan. It will go on sale in the U.S. and Europe in February.
The world’s second-largest maker of video-game machines said last month it temporarily suspended about 93,000 user accounts of its online gaming and entertainment services after finding they were hacked.
In April, hacker attacks compromised more than 100 million customer accounts, the second-largest online data breach in U.S. history. Sony suspended those services until July and budgeted 14 billion yen in costs this year.
The maker of Walkman music players booked net charges of about 700 million yen in the quarter ended June toward expenses for restoring factories after the March 11 earthquake in Japan forced the company to shut down plants.
–Editors: Anand Krishnamoorthy, Michael Tighe
To contact the reporters on this story: Mariko Yasu in Tokyo at ; Naoko Fujimura in Tokyo at
To contact the editor responsible for this story: Michael Tighe at
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