Sony on Thursday warned it would report a bigger-than-expected
annual loss, blaming costs tied to its exit from the personal computer
business, as the once-mighty firm undergoes a painful restructuring.
The Japanese electronics giant said it would book a 130 billion
yen net loss ($1.27 billion) in the latest fiscal year to March, while
it slashed its operating earnings outlook.
The figure is worse than a 110 billion yen net loss forecast just
three months ago, when Sony also announced it would cut 5,000 jobs in
its struggling computer and television units.
The move came after Moody downgraded its credit rating on Sony to
junk, saying the maker of Bravia televisions and PlayStation game
consoles had more work to do in repairing its battered balance sheet.
On Thursday, Sony said it now expected to record 30 billion yen in
additional expenses owing to its move out of personal computers, and 25
billion yen in impairment charges tied to its overseas production of
Blu-ray discs, DVDs and CDs. Sony reports its financial results later
this month.
"Primarily due to demand for physical media contracting faster than
anticipated, mainly in the European region, the future profitability of
the disc manufacturing business has been revised," it said.
Operating profit in the latest fiscal year would be down 89 percent
from the previous year, although sales were expected to jump about 14
percent to 7.77 trillion yen, it said.
PC sales got worse after its February profit warning and
"consequently, (the firm) expects to record write-downs for excess
components in inventory and accrual of expenses to compensate suppliers
for unused components ordered for Sony's spring PC lineup", the company
said.
"In addition, certain restructuring charges are expected to be recorded ahead of schedule," it added.
Sony, which is a small player in the global personal computer market,
is selling its Vaio-brand PC division to a Japanese investment fund as
it looks to concentrate on its lineup of smartphones and tablets.
After suffering four years of losses, Sony crept back into the black
in the previous fiscal year -- although that was mostly due to a weak
yen and asset sales, including the firm's US headquarters in Manhattan.
Despite its high-profile struggles, Sony has seen buoyant sales of
its Xperia smartphone offering and record demand for its new PlayStation
4 console. An entertainment arm, which includes a Hollywood studio, and
little-known insurance business also make money.
But the firm's chief executive Kazuo Hirai, who has been leading a
sweeping overhaul of Sony's business, has rejected calls to exit the
money-losing television unit.
Japanese manufacturers have suffered badly in their TV divisions as
razor-thin margins and fierce overseas competition weigh on results.
Mithilesh Chaubey
PGDM 2 sem
