January 24, 2021

Sony Slashes Annual Profit Forecast After Posting Quarterly Loss

TOKYO — Sony slashed its annual profit forecast after sinking to a 15.5 billion yen, or $199 million, quarterly loss Thursday, as lingering effects of the Tohoku earthquake, a punishingly strong yen and lackluster TV sales wiped out its bottom line.

The electronics and entertainment company, which is based in Tokyo, said in a statement that it now expected net income of 60 billion yen for the fiscal year that ends March 31, 2012, revising a 80 billion yen projection it made just two months ago.

Sony also cut projected sales for the year to 7.2 trillion yen from a previous forecast of 7.5 trillion yen.

The company said that its net loss for the April-June quarter came to 15.5 billion yen, compared with a profit of 25.7 billion yen for the same quarter a year earlier. The loss was significantly higher than a 2.5 billion yen loss estimate in a Bloomberg survey of three analysts.

Sony said that quake and tsunami damage to factories in the Tohoku area came to about 5.3 billion yen for the quarter, though some of that cost would be offset by insurance. It also said the recovery from the March 11 quake was progressing “faster than anticipated.”

Meanwhile, Sony has been battling slow demand for its high-end Bravia TVs amid growing global economic woes and heightened price competition.

Though Sony saw brisk sales in Japan before the country’s switch earlier this month from analog to digital broadcasting, sales in the United States and Europe were sluggish, the company said.

Slower personal computer and video camera sales helped to bring sales of Sony’s consumer products division to 732.3 billion yen, down 17.9 percent from the same period the previous year.

A strong yen — about 13 percent stronger against the dollar in the latest quarter, compared to the previous year — further hurt Sony profits. A strong Japanese currency makes Sony products more expensive, and therefore less competitive, overseas. It also erodes the company’s overseas earnings when they are repatriated.

Sony also suffered a series of hacker attacks on its Web sites and online services, including its popular PlayStation Network, which the company was forced to shut down in April. The network was fully restored earlier this month, but not without damaging the reputation of Sony’s online business.

The company said that user logins to the PlayStation Network in North America had returned “to a similar level as before the cyber attacks.”

Sony Ericsson, Sony’s long-suffering mobile phone joint venture with the Swedish telecommunications giant, posted a dismal quarter, with sales down 32.1 percent from the same period last year. Sony blamed the poor performance to a lack of critical components in the wake of the earthquake and a fall in shipments of cellphones as consumers shifted to more advanced smartphones.

Sony’s movie division was a bright spot, with sales up 9.3 percent in the quarter from the previous year to 144.4 billion yen on home entertainment releases of titles like “The Green Hornet.”

Sales at Sony’s music division fell 0.6 percent to 109.6 billion yen, however, despite a new release from Beyoncé and albums tied to the hit American TV show “Glee.”

Shares in Sony fell 1.1 percent to 2,013 yen in Tokyo trading before the earnings announcement. Sony shares have fallen 30 percent this year, far underperforming Japan’s benchmark Nikkei 225 Stock Average, which has fallen just over 3 percent.

Article source: http://www.nytimes.com/2011/07/29/business/global/sony-earnings.html?partner=rss&emc=rss

Speak Your Mind