Sony warns of $2.14bn annual loss, blames mobile unit

GMT 14:24 2014 Wednesday ,17 September

Arab Today, arab today Sony warns of $2.14bn annual loss, blames mobile unit

Sony has cut expectations
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 company also said it would cut the smartphone unit's global staff by 15 percent -- about 1,000 jobs -- and not pay dividends for the first time since its shares started trading in Tokyo in 1958.
The surprise announcement that Sony was heading for 230 billion yen net loss in the fiscal year to March 2015 comes only months after it tipped a loss of just 50 billion yen, citing a turnaround in its hard-hit television unit.
Sony has cut expectations for sales in the money-losing smartphone business, which has been hit by weaker-than-expected results in emerging markets, as it faces off against global rivals including Samsung and Apple.
The US tech giant is releasing its newest iPhone in Japan this week, which was likely to boost Apple's soaring presence in the Japanese market and heap more pressure on sales of Sony's rival Xperia offering.
"Other firms are also offering new products with innovative technology -- this business experiences dramatic changes in products and services," Sony chief Kazuo Hirai told reporters in Tokyo.
Hirai -- who has been leading a sweeping restructuring of Sony -- said smartphone makers in neighbouring China were another threat forcing down prices in the market.
"The environment is changing and becoming more severe," he said, adding that "Chinese smartphone makers are advancing and they have expanded outside China".
- Slimming down -
The ballooning loss forecast -- which Sony blamed on taking a charge to account for the declining value of its mobile unit -- was likely to resurrect fears that the once world-leading electronics company has a lot more work ahead to cast off years of losses.
Hirai said Sony would shake up its mobile unit to concentrate on top-end smartphones, and slim down the number of lower-end models.
"We are shifting our strategy from one aimed at expanding market share and sales volume to one that focuses on profitability," he said.
The new earnings 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 corporate overhaul, including exiting the PC 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 televisions, which he insists remain 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.
Sony's Tokyo-listed shares ended down 1.82 percent at 2,123.5 yen on Wednesday, with the earnings downgrade announced shortly after markets had closed.


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