October 29, 2020

Sony Swings to Big Loss After Natural Disasters

TOKYO — The March 11 earthquake and tsunami probably pushed Sony to a $3.2 billion loss in the just-ended fiscal year, the electronics and entertainment giant warned Monday, the latest Japanese manufacturer to report a huge economic hit from the disaster.

The annual loss would be Sony’s biggest in 16 years, a major setback to chief executive Howard Stringer’s drive to turn around the once-legendary maker of PlayStation video game consoles, Bravia flat-panel TVs and Vaio laptops.

Sony suffered damage at nine plants in northeastern Japan in the quake and tsunami, which also disrupted supply chains and put a damper on domestic consumption. A series of hacker attacks on Sony’s online services, which forced the company to shut down its PlayStation Network, has also clouded the outlook for the Japanese manufacturer.

After assessing the damage, Sony said Monday in a preliminary earnings statement that it expected to report a net loss of 260 billion yen ($3.2 billion) for the year ended March 31, 2011, from a previous forecast for a profit of 70 billion yen. The company reports full earnings on Thursday.

Much of the net loss came from a 360 billion yen provision for deferred tax assets the company is making in light of the uncertain outlook for future earnings. It left its forecast for annual operating profit unchanged at 200 billion yen ($2.4 billion).

For the current fiscal year ending March 2012, Sony said it expected operating profit to stay around 200 billion yen. This took into account the lingering effects of the quake, which will likely shave 150 billion yen off operating profit, Sony said.

Known costs related to the hacker attacks have so far reached about 14 billion yen, Sony estimated. Sony has said it hopes to get all affected networks up and running by the end of May.

Sales for the current year would likely come to about 7.18 trillion yen, down slightly from 7.20 trillion yen, it said. Sony said it expected net profit to turn positive this year, though it did not give an estimate.

Sony’s earthquake woes have come at a time the company is struggling to reinvent itself after being usurped in TVs and digital music players. Even its stronghold in the video gaming business is succumbing to cheaper and nimbler rivals. Sony has now lost money three years in a row.

Just as damaging have been the hacker attacks that forced Sony to shut down its PlayStation Network for almost a month. Sony has acknowledged that personal information from over 100 million accounts were compromised in the attacks.

In an interview last month, Mr. Stringer defended Sony’s response to the attacks, which some critics have said was too slow.

Sony is the latest Japanese manufacturer to report substantially lower earnings following the magnitude 9 earthquake in March, which devastated much of Japan’s northeastern coast.

Earlier this month, Toyota, whose operations have been severely disrupted since the disaster, said that profit fell 77 percent for the quarter ended March 31. Toyota, which is likely to lose its crown as the world’s biggest automaker this year, said it could not forecast earnings or production for the year ahead because of uncertainty about its ability to resume normal output levels.

Article source: http://feeds.nytimes.com/click.phdo?i=ae0ac071bea115c55684b6c3e7ea3028

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