August 18, 2022

Sony Sets Profit Target Lower Than Expected

TOKYO — Sony forecast Thursday that it would generate a lower-than-expected net profit this year as it wrestled with the aftereffects of the disastrous earthquake that struck Japan in March and a series of Internet security breaches.

Disruption to supply chains and the physical damage caused by the earthquake and tsunami have clouded Sony’s near-term prospects in its home market. The situation prompted the Japanese electronics and entertainment company Monday to announce a charge on tax credits that resulted in a $3.2 billion net loss for the business year that ended in March, its biggest deficit since 1995.

The latest travails for Sony — maker of PlayStation video games, Vaio computers and Bravia televisions — come as it struggles to regain market leads lost to Apple in portable music devices and Samsung in flat-screen televisions.

On Thursday, Sony predicted a net profit of ¥80 billion, or $978 million, for the financial year that started April 1, compared with analysts’ consensus of ¥105 billion compiled by Thomson Reuters. The company expects to make an operating profit of ¥200 billion in the year, reiterating guidance given earlier in the week, which had helped its shares rise.

But some think the company’s outlook might be too ambitious. “Looking at their forecast, it appears Sony is expecting a recovery in the latter half of the year, which is a bullish forecast,” said Koji Takeuchi, senior economist at Mizuho Research Institute, “but there’s a lot of uncertainty, and there is a risk they come in below that expectation. It is still unclear what the financial burden of the security breach will be.”

The company said that it would get some production restarted over the next two months at the most heavily damaged of its plants in northern Japan but that the disaster would continue to affect units, cutting operating profit ¥150 billion for the year.

“Although most of the ¥150 billion effect will be in electronics, there will be an impact on almost all product categories,” said Sony’s chief financial officer, Masaru Kato. “Those that are likely to be worst hit are televisions, digital cameras and devices.”

Sony said its business of liquid crystal display televisions was likely to lose money for an eighth consecutive year.

The company is also reeling from one of the biggest Internet security breaches, which caused it to close its PlayStation video game network for nearly a month after data on more than 100 million user accounts were leaked. On Tuesday, Sony said additional Web sites in four countries had been hacked. Among the break-ins, personal information for 8,500 people was leaked from its Sony Music Entertainment Web site for Greece.

Worries about both incidents have weighed on Sony shares, which have dropped by almost a quarter this year, three times the fall of the Nikkei average.

Article source: http://feeds.nytimes.com/click.phdo?i=55b4e0f481d8db16a94a7a355e8bf9d0

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