Sony Preps Markets for Record Loss
February 12, 2009
|Sir Howard Stringer |
Sony expects to post a record loss for its fiscal year ending in March. The Tokyo conglomerate issued a warning that it would report an operating loss of $2.9 billion for the year. The result will represent Sony's first operating loss in 14 years.
Sony's American Deposit Receipts slipped from around $21 to below $19.50 in the wake of the announcement late last month.
Sony cited the troubled economy as well as a strong yen for the downturn. The company is getting trounced by Apple and Nintendo in mobile music and gaming, and is losing money on its flat-screen TV business. Under an aggressive restructuring, the company is shutting down as many as a half-a-dozen factories and laying off up to 8,000 people. In December, Sony said about 16,000 jobs—about 4 percent of the workforce—would be trimmed from companywide payrolls. The restructuring charge is projected to be about $1.9 billion.
News of Sony's expected loss initially emerged on insider speculation that it would reach around $1.1 billion. Sony's power on the Nikkei immediately pulled the Japanese exchange down by about 5 percent.
Sir Howard Stringer, the first Occidental chief of the Japanese conglomerate, suggested the company's old guard would have to do business differently. During a news conference warning investors of Sony's first loss since 1995, Stringer was quoted by reporters saying, "There is still too much old Sony and not enough new."
Sony subsequently posted results for its third quarter, ending Dec. 31. The company logged an operating loss of around $197 million for the period, compared to operating profit of around $2.6 billion (in current exchange rates) one year earlier.
Sony Electronics, the business unit that comprises consumer cameras and television sets as well as professional TV gear, posted an operating loss of $175 million, compared to income of more than $2 billion the previous year. The loss was attributed to decline in sales from Sony Ericsson and for Bravia TV sets, Vaio computers and Sony Cyber-shot digital still cameras. Sales for the unit decreased by 29.3 percent from the previous year, and a $111 million restructuring charge was taken for the segment during the quarter.