Sony Expected To Report First Operating Loss in 14 Years
By Patricia Resende / Top Tech News. Updated January 13, 2009.
Sony has not been able to shield itself from the plummeting economy, and the company is expected to report its first group operating loss in 14 years -- only its second since Sony went public in 1958, according to a report by Japanese newspaper Nikkei.
The Japanese electronics company in October had a full-year operating profit of 200 billion yen (US$2.2 billion), but poor holiday sales and lowered consumer spending on electronics have hurt the company. Specifically, the company has seen demand for LCD televisions decrease. The recent drop in sales was enough to force the company to cut up to 16,000 jobs, including those of temporary workers, and cut investments in its electronics business by 30 percent in the fiscal year ending March 2010.
Last month, the company also announced that it would close at least five of its 57 manufacturing plants. The restructuring will save the company 92.5 billion yen (US$1.03 billion).
And that's not all. Sony also said it would stop production at two overseas manufacturing sites, including the Sony Dax Technology Center in France, shift manufacturing to low-cost areas, and use OEM partners. Sony also postponed expanding the Nitra plant in Slovakia, one of Sony's LCD television-assembling sites.
Sony, which offers many electronics products, from its PlayStation gaming systems to televisions and phones, is not immune from the failing economy, according to a recent report by the Consumer Electronics Association.
Gary Shapiro, president of the CEA, said the consumer-electronics industry continued to grow despite the downturn in 2008. But he also said the outlook for this year is not good, with projected domestic-shipment revenues likely to remain flat at $171 billion, a .6 percent decrease from 2008.
The primary revenue driver for the industry domestically, however, continues to be digital-TV displays, representing 15 percent of total industry shipments.
As the transition to digital television nears, unit shipments of DTVs will approach 35 million in 2009, an increase of nearly six percent over 2008, according to the CEA. LCD displays remain the top choice among consumers, representing 77 percent of total DTV units.
Sony is not alone in the battle against the economy. Other companies, including Panasonic, Canon and Toshiba, are struggling as well. Toshiba is expected to report a loss of 200 billion yen (US$2.2 billion) in March, according to Nikkei.
Consumer-electronics maker Sharp is also expected to report an extraordinary loss of more than 50 billion yen (US$559 million) for the year ending March 31, due to losses in its shares of Pioneer Corp.
Sony Keeps Quiet
Sony is staying tight-lipped about the alleged report of losses, but posted a note on its Web site.
"Sony understands that a story appeared in the media regarding Sony's expectations on operating results for the fiscal year ending March 31, 2009," the statement read. "Sony has made no announcement in this regard, and at this time has no further comment."
The potential losses will be great for a company operating in a tough economy while also dealing with the steep appreciation of the yen.