Friday, October 30, 2009

Sony stays in the red, trims annual loss forecast

TOKYO -- Sony reported a smaller-than-expected 26.3 billion yen ($289 million) quarterly loss as cost cuts combined with healthy sales of PlayStation 3 game consoles and Michael Jackson hits helped it inch toward recovery.

The Japanese electronics and entertainment giant has been battered by the global slowdown, sliding prices of gadgets and its failure to produce new blockbuster consumer products. But Tokyo-based Sony Corp. said Friday it now expects a smaller flow of red ink for the full fiscal year through March 2010.

It's forecasting a 95 billion yen ($1 billion) loss compared with the initial projection for a 120 billion yen ($1.3 billion) loss. The new forecast is marginally better than the 98.9 billion yen loss it suffered the previous fiscal year.

Chief Executive Howard Stringer has promised a turnaround at Sony since taking the helm in 2005, but convincing results have been slow in coming.

Stringer has appointed a new and younger management team that he says will better bring together Sony's sprawling empire, including gaming, electronics and entertainment.

A Welsh-born American and the first foreigner to head Sony, Stringer has carried out aggressive cost cuts, shutting plants, reducing suppliers and slashing jobs by the thousands. But the global economic slump and lack of hit products like Apple's iPhone and Nintendo's Wii have hampered recovery efforts.

Sony said it managed to turn a profit in the July-September quarter at its core electronics and device business. But Sony acknowledged its liquid crystal display TVs and game machine computer chip businesses continued to be hurt by intensifying price competition.

The perk Sony got from nostalgic demand for Jackson albums following his death in June wasn't enough to offset the losses in its other divisions.

Other best-selling albums for the quarter included Whitney Houston's "I Look To You" and the King of Leon's "Only By The Night," Sony said in a statement.

A strong yen, which diminishes the overseas earnings of Japanese exporters, erased 77 billion yen ($846 million) from Sony's quarterly operating profit.

The rising yen hurt Sony's gaming business despite stronger sales of the PlayStation 3, which got a lift from a recent price cut. Sony sold 3.2 million PlayStation 3 machines around the world during the latest quarter, compared to 2.4 million the same period the previous year.

Sony hopes to sell 13 million PlayStation 3 consoles for the fiscal year through March 2010. But sales of its predecessor PlayStation 2 have been lagging, hurting profitability, it said.

FILE - In this Aug. 19, 2009 file photo, Sony Computer Entertainment Japan President Shawn Layden speaks on a new PlayStation 3 during a news conference in Tokyo, Japan. Sony reported Friday, Oct. 30, 2009, a smaller-than-expected 26.3 billion yen loss ($289 million) for the July-September quarter as healthy sales of its PlayStation 3 game consoles and Michael Jackson catalog recordings helped along a gradual recovery. Itsuo Inouye, FILE / AP Photo

Sony, which also makes Walkman portable music players and Bravia flat-panel TVs, had reported a 20.8 billion yen profit for the July-September period last year.

Analysts surveyed by Thomson Reuters had expected a 40 billion yen loss ($440 million) for the July-September quarter this year and were expecting full year losses to be reduced to 89 billion yen ($978 million).

Quarterly sales plunged nearly 20 percent to 1.66 trillion yen ($18.2 billion) from 2.07 trillion yen the same period the previous year. The global slowdown dragged on consumer spending and the strong yen pushed down overseas sales when translated into yen.

Sony said its Vaio PC business took a hit from flagging global sales and the yen. But its financial services division boosted sales amid solid investments at insurer Sony Life as the Japanese stock market recovered.

Not so positive were results at its movie section which lacked major theatrical releases except for "District 9" and "Julie & Julia," according to Sony.

The company booked equity-related losses for poor results at joint ventures, including Sony Ericsson Mobile Communications, which makes cell phones, Sony BMG Music Entertainment and S-LCD Corp., which makes flat-panel TVs with South Korean rival Samsung Electronics Co.

For the first six months of the fiscal year, Sony lost 63.4 billion yen ($697 million yen), a reversal from a 55.79 billion yen profit for the first half of fiscal 2008, on 3.261 trillion yen ($35.8 billion) sales, down 20 percent from the previous year.

Sony shares, which nose-dived to about 1,500 yen ($16) earlier this year, gained 2.8 percent to close at 2,785 yen ($30) in Tokyo.

Read more:

No comments:

Post a Comment