Wednesday 20 June 2018

Sony warns of big loss; TV business in trouble

Tokyo, November 2, 2011

Sony Corp surprised investors on Wednesday by warning it is heading for its fourth straight annual net loss and that its TV business alone would produce a loss of $2.2 billion due to tumbling demand and a surging yen.

The maker of Bravia TVs, Vaio computers and PlayStation game consoles cut its sales forecast for TVs, cameras and DVD players on Wednesday and said it may report 90 billion yen ($1.1 billion) net loss in the current financial year, scrapping its earlier net profit estimate of 60 billion yen.

 Investors had expected Sony to reduce its profit forecast, but not flag a swing to massive losses. Sony vowed to bring an end to losses in its TV division, which it expects to report its eighth straight annual loss. But it gave scant details of a plan to halve losses next year and drag the unit into the black by March 2014.

'I am surprised at the extent of the losses and I was anticipating TV restructuring, so I feel let down on both counts,' said Shigeo Sugawara, senior investment manager at Sompo Japan Nipponkoa Asset Management, which owns Sony shares.

'We were focused on what would happen to Sony's TV division, but I don't see any drastic restructuring steps, in fact I can't even see any signs they've begun to cut,' he added.

Sony said it would revamp LCD panel procurement, but second-in-command Kazuo Hirai declined to comment on reports it would end a panel joint venture with Samsung Electronics.

The lack of firm details from Hirai, in a rare appearance at an earnings conference on Wednesday, dashed investor hopes that the once-stellar brand is at last getting to grips with its struggling TV business and can challenge smartphone rivals.

Sony said it expected TV losses to be 175 billion yen ($2.2 billion) this financial year, including a 50 billion yen impairment charge. It cut TV sales forecast by 9 percent to 20 million sets, its second reduction this year.

'The TV business is an essential part of Sony's growth strategy. We, as management, feel a great sense of crisis after seven straight years of losses,' Hirai, executive deputy president, told a briefing. He described this year's losses as a necessary step towards recovery.

Hirai, appointed to the company's No. 2 position this year, must map out a plan for earnings growth if he is to take over the top job from Welsh-born Howard Stringer, analysts said.

Sony, which also cut its full-year operating-profit outlook by 90 percent to its lowest level in three years, said earlier this week that it would split its television business into three divisions of outsourcing, LCD TVs and next-generation TVs from November 1 to turn around the operation.

Sony might also pull out of its flat-screen venture with Samsung Electronics Co, sources say, which will enable it to cut panel supply costs and improve its TV business earnings . The company revealed no details of such a plan on Wednesday. - Reuters

Tags: Sony | PlayStation | Bravia TV |


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