(AFP) – May 14, 2009
TOKYO (AFP) — Sony Corp. on Thursday announced its first annual loss in 14 years and warned it would stay in the red this year as the global economic downturn inflicts heavy damage on Japan's high-tech giants.
The maker of Bravia televisions, PlayStation game consoles and Cyber-shot cameras said it would shut more plants as it braces for its first back-to-back annual losses since it was listed on the stock market in 1958.
Sony suffered its biggest ever operating loss of 227.8 billion yen (2.4 billion dollars) in the business year to March, a dramatic turnaround from the previous year's profit of 475.3 billion yen.
It posted a net loss of 98.9 billion yen, against a year-earlier profit of 369.4 billion. The loss was about one-third smaller than Sony had forecast.
"The business environment has been extremely severe," chief financial officer Nobuyuki Oneda told reporters.
"The rapid appreciation of the yen as well as the sharp decline of Japanese stocks significantly affected our company's earnings."
For the current business year to March, Sony expects a net loss of 120 billion yen and an operating deficit of 110 billion yen.
"We expect the first half of this fiscal year will continue to be difficult," said Oneda. "Some improvement should be seen from the second half."
Sony's chief executive Howard Stringer is slashing 16,000 jobs and axing about 10 percent of the group's manufacturing plants in an effort to reduce costs by 300 billion yen a year.
The company said Thursday it would close another three domestic factories as part of its restructuring but announced no new job cuts.
Some analysts believe the group needs an even more drastic overhaul.
"The company says some improvement may be seen in the second half of the fiscal year, but I'm afraid it is too optimistic," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
"The issue for the company is whether it can stop the losses in the TV segment. Sony will have to cut more jobs, which must be done more boldly and quickly. It needs more restructuring before it starts seeing an improvement."
Sony's core electronics division lost 168.1 billion yen last year while the game unit ended 58.5 billion dollars in the red.
Sony once said it aimed to become the top TV maker in the world, but its chief financial officer said the priority now was to end losses at the division.
"It is not the right time for us to go for quantity. We want to focus on securing profits," Oneda said.
The company has had a difficult few years in the face of tough competition from rival products such as Apple's iPod and Nintendo's Wii, but it had been enjoying a recovery before the current economic downturn began.
Stringer, a Welsh-born American who became the first foreign chief at one of Japan's most famous companies in 2005, recently tightened his grip on power, taking over the post of president from Ryoji Chubachi.
The former television journalist wants to meld the company's strengths in televisions and other gadgets with its games and movies.
Other Japanese high-tech giants have also been badly affected by the global economic slowdown, which has pushed down demand for their products and sent the yen soaring, eroding export earnings.
Sanyo Electric Co. reported an annual net loss of 93.23 billion yen (976 million dollars) but said it expects to break even this year.
Hitachi announced Tuesday an annual loss of 787.3 billion yen (8.1 billion dollars), the biggest ever deficit posted by a Japanese manufacturer.
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