November 25, 2024

Mounting Woes Prompt Sony to Predict Another Annual Loss

TOKYO — A strong yen, flooding in Thailand and tepid sales in the United States and Europe all conspired to knock Sony to a net loss for the latest quarter, putting the company on course for a fourth unprofitable year in a row.

The Japanese electronics and entertainment giant said Wednesday that it expected to post a net loss for the financial year ending next March of ¥90 billion, or $1.2 billion, compared with a previous forecast of ¥60 billion in net profit. Sony booked a net loss of ¥27 billion for the quarter through September, compared with a profit of ¥31.1 billion a year earlier. Sales in the quarter fell 9 percent from a year earlier to ¥1.58 trillion.

The somber numbers put pressure on Howard Stringer, the Welsh-born American chief executive who is in his seventh year at Sony’s helm, to take more drastic measures to turn around the manufacturer or hand over the reins to someone who can.

Mr. Stringer, 69, had suggested that he would lay the foundations for a strong recovery at Sony, equipping it to put up a better fight against rivals like Apple and Samsung before leaving the company in the hands of a younger successor. But with its bottom line decimated by the global financial crisis and then more recent problems, the handover could be a messier affair.

Sony has, in fact, been making progress in restructuring its sprawling empire, shuttering some factories and paring down its supply chain. It said last week that it would spend €1.05 billion, or $1.5 billion, to take full control of its struggling cellphone venture with Ericsson of Sweden, and announced plans to realign its money-losing television business.

Kazuo Hirai, an executive vice president considered to be a strong contender to succeed Mr. Stringer, offered more details Wednesday of Sony’s plan to turn around its television operations, saying it would incur costs of ¥50 billion to streamline production and other fixed costs. Sony will also reduce the number of television models it offers, said Mr. Hirai, who leads the company’s consumer electronics business.

“The entire Sony management feels a grave sense of crisis that we have continued to post losses in TVs,” Mr. Hirai, 50, said at a news conference. “We urgently want to escape this chronic loss-making state,” he said.

But 2011 has been a painful year for Sony, with much of its troubles caused by misfortune. It was forced to halt production at 10 factories in the aftermath of Japan’s earthquake and tsunami in March, including a Blu-ray disc plant completely overrun by waves. A few weeks later, a massive computer hacking attack that compromised more than 100 million accounts on the PlayStation Network exposed embarrassing weaknesses in the company’s online defenses, forcing the company to shutter the popular video game service for more than a month.

In August, rioters in Britain set fire to a north London warehouse containing CDs and DVDs, burning it to the ground. More recently, devastating floods in Thailand submerged a digital camera factory and forced Sony to halt production at a semiconductor plant because of supply shortages.

All the while, the punishing strength of the yen against the dollar and euro has weighed on Sony’s earnings, making its products less competitive globally and eroding its overseas earnings. The yen soared to a post-World War II record earlier this week, prompting the Japanese government to intervene in currency markets to try to tame its rise.

Sony has also long had its hands tied in trimming its global work force of almost 170,000. A third of those employees are in Japan, where large-scale layoffs by top companies are highly controversial.

“We are fighting against strong headwinds,” said Masaru Kato, the chief financial officer of Sony.

Those woes have hindered what Mr. Stringer has called Sony’s “four-screen strategy,” centered on its smartphones, tablet computers, personal computers and televisions. The idea, according to Mr. Stringer, is to bring content from Sony’s music and movie companies exclusively to those gadgets, spurring both hardware and software sales.

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