(Reuters) – 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.
Sony Corp is pictured at an electronic store in Tokyo April 9, 2012. REUTERS/Yuriko Nakao
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.
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GRAPHIC: Sony earnings r.reuters.com/vah46s
GRAPHIC: Sony staff details r.reuters.com/kam57s
SPECIAL REPORT: The Sony Schism
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BREAKINGVIEWS-Sony resets ahead of reboot
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Sony forecast a 520 billion yen
($6.4 billion) 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.
($1 = 81.3900 Japanese yen)
(Additional reporting by Mayumi Negishi; Writing by Ian Geoghegan; Editing by Edwina Gibbs and Alex Richardson)
(This
story corrects Nikkei close in the penultimate paragraph)