Sony posts a record loss, vows 2012 profit
Sony Corp., anxious to leave behind a year plagued by floods, earthquakes, economic turmoil and a record $5.6-billion loss, vowed Thursday to return to profitability this year.
The Japanese consumer electronics and media giant forecast that it would increase revenue 14% and post a modest $366-million profit this fiscal year, thanks to aggressive cost-cutting and top-to-bottom reorganization that would de-emphasize its once-dominant television business and focus on more profitable products.
The surprisingly sanguine forecast came after Sony on Thursday reported a 9.6% drop in sales in its fiscal year that ended March 31: The $79.2 billion was down from $87.8 billion a year earlier. The company also posted a loss of $5.6 billion, or $5.55 a share, nearly double the prior year’s loss of $3.2 billion.
About $3.2 billion of red ink recorded for last fiscal year came from a paper loss Sony incurred by writing down deferred tax assets. The company warned investors in April of the expense hit as well as the drop in sales.
Much of last year’s revenue decline was due to a steep 18.5% drop in sales of its LCD television sets, digital cameras, personal computers and gaming products, which made up close to half of Sony’s total revenue.
Sony’s TV and games businesses suffered from severe competition from lower-cost rivals that pushed the company to slash prices.
Meanwhile, sales of its digital cameras and PCs fell after an October flood in Thailand left factories crippled for weeks. The company estimated that it lost $170 million in sales while its facilities were undergoing repairs that a cost of $160 million. In addition, a devastating earthquake in March 2011 knocked Japan to its knees and triggered a decline in that country’s consumer spending.
Sony’s movie business blunted the losses in electronics, recording a $416-million operating profit on $8 billion in sales. A 9.6% uptick in revenue for its Culver City-based Sony Pictures came from the studio’s television business as well as growth in video-on-demand sales and a one-time gain from selling its portion of the royalty rights to “Spider-Man” merchandise.
Its music business marked a drop in sales to $5.4 billion, down 6% from $5.7 billion a year earlier, as CD sales continued to erode. Operating profits slid 5.2% to $450 million, down from $475 million the year before.
Sony Corp.’s new chief executive, Kazuo Hirai, has vowed to turn things around, telling investors that “Sony will change.”
Last month the company said it would eliminate 10,000 jobs. The announcement followed a corporate realignment that demoted its once-sacred television business.
Looking ahead, Hirai said Sony would focus more on games, digital imaging and mobile products.
