Home
Tv
Tv News
Sony sees record $6.4 billion net loss, to take tax hit

Sony sees record $6.4 billion net loss, to take tax hit

By Reuters | Updated: 5 June 2012 15:05 IST

Highlights

Sony has forecasted a $6.4 billion net loss for the year just ended, double that of earlier forecasts; a fourth straight year of losses.

Sony Corp forecast a record $6.4 billion net loss for the business year just ended, double earlier forecasts and a fourth straight year of losses, inflated by writing off deferred tax assets in the United States.

In a bid to ease investor concerns over its deteriorating bottom line, the Japanese consumer electronics giant said it would bounce back this year and make an operating profit of 180 billion yen.

Sony, which plans to axe 10,000 jobs - around 6 percent of its global workforce - according to media reports this week, has been hammered by weak demand for its televisions and been overtaken by more innovative gadget rivals such as Apple Inc and Samsung Electronics.

Kazuo Hirai, who took over as CEO this month, has said he is prepared to take "painful steps" to revive the company and would not hesitate to scale back or withdraw from businesses if they were not competitive.

The Sony veteran, known for reviving the PlayStation gaming operations through aggressive cost-cutting, has promised to get the struggling TV business - which has lost $10 billion alone in 10 years - back on its feet within two years.

Sony forecast a 520 billion yen net loss for the year to end-March 2012. In February it had forecast an annual net loss of 220 billion yen. The additional loss is from write-offs of tax credits in the United States, which the company cannot use because of the losses it has racked up.

Analysts had forecast a full-year loss of 214 billion yen, according to Thomson Reuters I/B/E/S.

"To bring Sony back, Hirai needs to develop personnel and platforms that create competitive and innovative products, but that will be a formative task after a lot of talent left under early retirement plans," said Tetsuru Ii, president of Commons Asset Management, who oversees about 2.7 billion yen worth of assets and does not hold a stake in Sony.

"The old Sony culture would only allow it to make things that were the best globally. Under that logic, does it make sense for Sony to continue its TV business, when it's not even the market leader in Japan?

"In terms of management philosophy, (Hirai) will have to choose and focus the company's business activities."

Rekindling the flame?
Some analysts believe Hirai, a fluent English speaker, can rekindle the Sony flame, saying he has a good grasp of the business and is likely to know how to break down its silos and integrate its divisions.

A key concept in Hirai's strategy hinges on merging Sony's robust roster of entertainment properties - including singers Kelly Clarkson and Michael Jackson, and the "Spider-Man" and "Men in Black" film franchises - with its Vaio, Bravia and other electronics brands, in an effort to boost sales.

He has said the TV business would be crucial to this "convergence" strategy, brushing aside suggestions it may need to pull out of the market.

Recently, Sony exited an LCD panel venture with Samsung, enabling it to obtain screens for its TVs more cheaply. It also agreed to buy out Ericsson's half of their smartphone venture for $1.5 billion to shore up its position in a market where Apple and Samsung have become leaders.

Hirai, who was promoted from head of Sony's consumer products and services businesses that produce the bulk of Sony's $85 billion in annual sales, has also singled out medical as a potential core business for the future.

Sony shares closed down 3.5 percent ahead of the announcement on Tuesday, its biggest one-day drop in three weeks. The benchmark Nikkei average ended around 0.1 percent lower. The stock has almost halved since little more than a year ago, and has dropped 11 percent in the past 10 trading sessions.

The annual results are due on May 21.

Copyright Thomson Reuters 2012

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.

Further reading: Apple, Hirai, PlayStation, Sony, Sony forecastes loss

Sony sees record $6.4 billion net loss, to take tax hit

Related Stories