Sony’s Quarterly Net Loss Widens
Restructuring costs sank Sony Corp. deeper into red ink for the latest quarter in the midst of a turnaround effort under Chief Executive Howard Stringer, the first foreigner to head the Japanese company.
Sony, which brought the world the Walkman portable player and the PlayStation video game machine, reported a 66.5-billion-yen ($582.8-million) loss Thursday for the January-to-March quarter, exceeding its loss of 56.5 billion yen in the same period the previous year.
It was the fifth consecutive year that Sony racked up a loss in the final fiscal quarter -- a testament to the serious restructuring the electronics and entertainment company has been undergoing for years.
Quarterly sales, however, rose 8.7% to 1.85 trillion yen ($16.2 billion) from 1.7 trillion yen the previous year, a sign of a recovery led by better sales of TVs and other gadgets. But some of those gains came from a weak yen.
Restructuring expenses weighed heavily on the company, costing 75.3 billion yen, mostly in the electronics sector, during the quarter, up from 48.6 billion yen for restructuring the previous year. Development costs for the PlayStation 3 also added to the losses, Sony said.
In recent years, Sony has fallen behind in portable music players, overshadowed by Apple Computer Inc. with its iPod, and in flat-panel televisions, dominated by Japanese rivals including Matsushita Electric Industrial Co., which makes Panasonic brand products, and Sharp Corp., as well as by Samsung Electronics Co. of South Korea.
Under Stringer, the company has embarked on drastic cost cuts, dropping parts of its business such as the Qualia luxury electronics lineup and Aibo entertainment robots.
Samsung, by contrast, has been booming, earning 1.88 trillion won ($2 billion) in the same quarter.
Sony boosted TV sales last year, especially in the U.S., after it began making flat-panel TVs in a partnership with Samsung, a smart business move for the company but an admission that it couldn’t catch up alone in liquid crystal display technology.
For the fiscal year ended March 31, Sony marked a 123.6-billion-yen ($1.08-billion) profit, down 24.5% from 163.8 billion yen in fiscal 2004. Fiscal 2005 sales climbed 4.4% to 7.48 trillion yen ($65.6 billion) from 7.2 trillion yen in fiscal 2004.
Profit and sales exceeded Sony’s forecasts. The company had initially forecast a 10-billion-yen loss for the fiscal year but later raised that to a 70-billion-yen profit on 7.4 trillion yen in sales.
The video game business suffered somewhat in the last year because of a decline in interest in the PlayStation 2 home console as gamers await the upgrade, PlayStation 3, expected to go on sale in November.
Sony said fiscal 2005 sales in the movie segment rose mainly because of a weak yen in the absence of hits such as “Spider-Man 2” the previous year.
In the game unit, fiscal-year sales rose because of the popularity of the PlayStation Portable hand-held device, of which 14 million were shipped during the year. PlayStation 2 shipments stayed flat at 16.2 million.
