TOKYO (AFP) – Sony on Wednesday said it would lose $2.14 billion this fiscal year, more than four-times its earlier forecast as the Japanese electronics giant blamed a downturn in its mobile phone business.
The estimated net loss of 230 billion yen in the fiscal year to March 2015 came as a surprise only months after it tipped a loss of just 50 billion yen, citing a turnaround in its hard-hit television business.
Sony has cut expectations for sales in the smartphone business, which has been reporting operating losses as it faces off against global rivals including Apple and South Korea’s Samsung.
The announcement, which came after Japanese markets had closed, is likely to resurrect fears that the once world-leading electronics company has a lot more work ahead to cast off years of losses.
It also said it would not pay a year-end dividend for the first time since it started trading in Tokyo in 1958, according to the leading Nikkei business daily.
Japan’s electronics giant Sony president Kazuo Hirai (R) and CFO Kenichiro Yoshida (L) bow their heads as they announce the company will slash the company’s staff count by 15 per cent at a news conference at Sony’s headquarters in Tokyo – AFP
On Wednesday, the company said it had “modified” its mid-range business plan (MRP) to “address the significant change in the market and competitive environment of the mobile business”.
“Under the new MRP, the overarching strategy for the (mobile) segment has been revised to reduce risk and volatility, and to deliver more stable profits,” it said in a statement. “This revision includes changing the strategy of the (mobile) segment in certain geographical areas, concentrating on its premium lineup, and reducing the number of models in its mid-range line-up.”
Sony boss Kazuo Hirai is expected to hold a news conference around 5pm local time (0800 GMT).
The new estimate will see Sony post a 40 billion yen operating loss – reversing earlier expectations for a 140 billion yen profit – on previously forecast sales of 7.8 trillion yen.
In May the firm posted a bigger-than-expected loss of 128.37 billion yen in the fiscal year to March. That came several months after announcing 5,000 job cuts at its struggling computer and television units.
Sony has seen its credit rating slashed to junk as it undergoes a painful restructuring, including exiting the personal computer business and liquidating assets that saw the $1.0 billion sale of its Manhattan headquarters.
The firm is also selling properties at a prestigious Tokyo site where its headquarters had been for six decades.
Hirai has repeatedly shrugged off pleas to abandon the still ailing television unit, which he insists remains central to Sony’s core business.
Japanese manufacturers have suffered badly in their TV divisions as razor-thin margins and fierce overseas competition weigh on profits. However, Sony has fared the worst, with its earnings trailing struggling domestic rivals Panasonic and Sharp, both of which have reported profits following record losses as they overhaul their vast businesses.