Sony reports $391 million quarterly loss, keeps forecast for more red inkBy Yuri Kageyama, AP
Thursday, July 30, 2009
Sony quarterly loss $391 mln, expects more red ink
TOKYO — Sony Corp. stuck to a forecast for big full year losses, citing falling gadget prices and a shaky global recovery, even as it posted less-dismal-than-expected results for the fiscal first quarter.ARTICLE CONTINUED BELOW
The maker of the PlayStation 3 game machine and Walkman portable music player said Thursday it sank to a net loss for April-June of 37.1 billion yen ($391 million) from a 35 billion yen profit a year earlier. Quarterly sales dropped 19.2 percent to 1.56 trillion yen ($16.4 billion).
The results were better than expected because of cost cuts, an easing of the yen’s appreciation and gains on the Tokyo stock market, according to Sony, which also has music and movie divisions. Analysts surveyed by Thomson Reuters were forecasting a 109 billion yen loss.
A new management team under Chief Executive Howard Stringer has been promising a nimbler Sony, but little in the way of specifics has been revealed. For decades, Sony, founded in 1946, was synonymous with quality electronics but in recent years the company has lost its footing, taking an embarrassing beating in portable music players from the iPod from Apple Inc. and falling behind in flat panel TVs.
Results from other Japanese electronics makers including Nintendo Co., Sharp Corp., NEC Corp. and Fujitsu Ltd. were also dreary and their outlooks mixed. Consumer spending on video games and other consumer electronics could lag the tentative recovery shown by other economic indicators. In Japan, the world’s second-biggest economy, factory output has been recovering but retail sales have continued to slump amid rising unemployment.
Nintendo, whose popular Wii home console competes against Sony’s PlayStation 3, stayed in the black. But the Kyoto-based maker of Pokemon and Super Mario games saw its quarterly profit tumble 61 percent to 42.3 billion yen. It blamed a strong yen and fewer hit games. Quarterly sales declined 40 percent to 253.5 billion yen.
Tokyo-based Sony remained cautious and kept its forecast for the fiscal year through March 2010 unchanged at a 120 billion yen ($1.26 billion) loss, citing too many uncertainties about the future.
Ryosuke Katsura, an analyst with Mizuho Securities Co. in Tokyo, warned TV flat panel prices were starting to rise, while price competition for TV sets was intensifying and likely to further erode Sony’s profitability.
If Sony decides to slash PlayStation 3 prices, as analysts widely expect, the move may draw gaming fans but will be another hit to the bottom-line, he said.
“It is still too early to assess the second half of the year,” Katsura said.
In a plus for the future, Sony said it had finalized a deal with Japanese rival Sharp Corp. on a joint venture to produce and sell large-size liquid crystal display panels for TVs.
Sony, which has fallen behind in LCD TVs, doesn’t make its own panels. Instead it has relied on an LCD display joint venture with Samsung Electronics Co. of South Korea.
Sony said it will make an initial investment of 10 billion yen in the new venture with Sharp in Sakai city, central Japan, which will produce 72,000 panels a month. Sony said it will make additional investments later on.
The global economic slump continued to batter Sony’s sales in the last quarter. Sales of consumer electronics such as Bravia TVs, Cyber-shot digital cameras and Handycam camcorders plunged 27.3 percent from a year earlier.
Sales of the PlayStation 3 fell to 1.1 million from 1.6 million in the same period the previous year. PlayStation Portable sales declined to 1.3 million from 3.7 million.
Gadget prices have been dropping amid intense competition, making it tough for Sony to eke out profits.
In contrast to its money-losing electronics and gaming units, Sony’s entertainment divisions were profitable.
Sales were up 6.5 percent at Sony Pictures Entertainment, which swung into the black from losses the previous year on the success of Hollywood releases such as “Angels & Demons” and “Terminator Salvation.”
Sales doubled at its music division after Sony Music Entertainment became a wholly owned Sony subsidiary in October, offsetting the damage from a sluggish global music industry.
Best-selling albums during the quarter were Bob Dylan’s “Together Through Life,” Dave Matthews Band’s “Big Whiskey and the GrooGrux King,” and King of Leon’s “Only by the Night,” according to Sony.
Meanwhile, another Japanese electronics giant, NEC, racked up a 33.8 billion yen quarterly loss as sales dropped 22.3 percent to 778.5 billion yen. But NEC said the downturn appeared to be easing.
Sharp, the maker of Aquos flat-panel TVs, sank to a 25.2 billion yen loss for the April-June period, as a companywide effort to cut costs failed to offset plunging demand.
Fujitsu reported a 29.1 billion yen loss for the fiscal first quarter, as quarterly sales slipped 11.3 percent to 1.044 trillion yen.
Sony shares rose 6.8 percent to 2,505 yen in Tokyo.
Tags: Asia, Consumer Spending, East Asia, Entertainment And Media Technology, Games, Japan, Recreation And Leisure, Tokyo