Sony posts record $5.7 billion full-year loss
Sony Corp. Chief Financial Officer Masaru Kato bites his lips during a news conference at the company's head office in Tokyo, Thursday, May 10, 2012. Sony Corp. racked up a record annual loss of 457 billion yen ($5.7 billion) in its fourth straight year of red ink as the once-glorious maker of the Walkman and PlayStation struggles toward a turnaround under a new president. AP PHOTO/SHIZUO KAMBAYASHI
TOKYO—Japanese electronics giant Sony on Thursday posted a record full-year loss of $5.7 billion, but vowed it would swing back into the black this year as it embarks on a huge restructuring plan.
Sony, which is struggling to stem losses at its television division, on Thursday said a strong yen and natural disasters were among the main reasons for its disastrous earnings.
“Sales decreased… primarily due to unfavorable foreign exchange rates, the impact of the Great East Japan Earthquake (in March 2011)… the floods in Thailand, and deterioration in market conditions in developed countries,” it said in a statement.
The natural disasters hammered Japanese manufacturers while Sony has also blamed tough competition and falling prices, particularly in the television segment, for its struggles.
Sony’s 456.66 billion yen ($5.7 billion) loss for the year to March, its fourth consecutive year in the red, came after it said last month it would cut about 10,000 jobs and spend nearly $1 billion on an overhaul that its new chief executive Kazuo Hirai described as “urgent.”
Sales for the year fell 9.6 percent to 6.49 trillion yen, while the firm booked an operating loss of 67.28 billion yen.
On Thursday, Sony’s Chief Financial Officer Masaru Kato said the company was aiming to make its television business profitable next fiscal year, with the firm on course for a net profit of 30 billion yen in the current fiscal year on sales of 7.4 trillion yen.
However, analysts have criticized the turnaround plan as not enough to win back Sony’s reputation as an innovator or vault its foreign rivals.
“The last year was horrible,” Hiroshi Sakai, analyst at SMBC Friend Securities in Tokyo, told AFP on Thursday.
“Some complex, bad conditions hit the company, including a soaring yen… But there is a question as to whether Sony should keep the TV division as part of its business.”
Sony’s reforms, in addition to the jobs cuts, also include expanding its PlayStation and online games business, and pushing further into emerging markets and new sectors, such as medical equipment and life sciences.
“Now is the time for Sony to change,” Hirai, who replaced Welsh-born US chief executive Howard Stringer earlier this year, said in April.
“What is urgent is that we strengthen our core businesses while rebuilding our TV business.”
Investors, however, have been unimpressed. Sony shares are now worth 1,213 yen, down from 1,528 yen before Hirai unveiled his plan last month.
Sony, along with Japan’s other electronics giants including Panasonic and Sharp, has been fighting a losing battle for years against fierce competition offered up by competitors including South Korea’s Samsung and US-based Apple.
Falling prices, particularly in the television segment, have eaten away at their bottom line as a strong yen made their products more expensive overseas, while a stuttering global economy has also knocked sales.
Sony still generates profits in some areas, such as electronics parts, but critics have accused the company of various strategic blunders over the years including being late to enter the liquid crystal display panel market.
The firm was forced in December 2008 to slash 16,000 jobs worldwide as it came under pressure amid tumbling demand during the global financial crisis.
In March, Sony announced the sale of its chemical division to the Development Bank of Japan, saying the unit did not fit with its revamp.
