January 13th, 2009
Buzz from Japan: Sony's first loss in 14 years
Media reports out of Tokyo today say that Sony Electronics will likely report an annual operating loss of about $1.1 billion - its first loss in 14 years - when its fiscal year ends this Spring because of sluggish sales and a stronger yen. The company is slated to report third quarter earnings on Jan. 29.
A annual loss could prompt shareholders to pressure Sony for a bolder restructuring plan and more job cuts, beyond the cutbacks included in a restructuring plan announced last month. That plan called for curbing investment, exiting specific businesses and cutting 16,000 jobs, which includes 8,000 regular workers or 4 percent of its global workforce, according to a Reuters report.
Once again, blame points to the global economic woes, which has led to increased inventories and lower pricing. Shares of Sony slid almost 9 percent on the Tokyo Stock Exchange on the reports while shares on the New York Stock Exchange were slipping - down more than 3 percent in mid-day trading. According to the Associated Press:
Past troubles in Sony’s electronics business had been offset by gains in other divisions, such as video games and also its once-thriving insurance and banking divisions in Japan. But now, it is seeing slumps across the board. Video games have struggled to boost profits, and the financial branches have been hit hard by the global credit crunch. “In that sense, Sony is in an extremely tough situation this time,” said Kauharu Miura, an analyst with Daiwa Institute of Research.
Japanese media also reported that rival Toshiba Corp. could be headed for a big financial loss - about $2.2 billion - sending its shares downward, even though the company is still reviewing earnings forecasts and has not issued guidance. Last week, Panasonic said it would probably miss its sales targets for the year ending in March and also said it would cut investments in two flat-panel factories.
Sam Diaz is a senior editor at ZDNet. See his full profile and disclosure of his industry affiliations.
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