SONY FALLS ON WEAK DEMAN
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(AP) TOKYO- Battered by the strong yen and sliding consumer demand, Sony Corp. Thursday reported fiscal third-quarter net profit skidded 95% and reiterated it will likely to swing into its first net loss in 14 years for this fiscal year ending March.
The Tokyo-based electronics giant said net profit for the October-December period said net profit for the October-December period dropped to ¥10.4 billion ($115.2 million) from ¥200.2 billion a year earlier as it felt the full force of recession in key global markets that has crimped consumer spending, hitting big Japanese technology names from camera maker Canon Inc. to videogames specialist Nintendo Co.
Both Canon and Nintendo have already reported weak earnings for the period, with players from Panasonic Corp. to Pioneer Corp. expected to follow suit.
Exacerbating weak consumer spending patterns, export revenue weakened in line with the Japanese currency’s ascent: Sony books over four-fifths of all sales outside
Thursday it said revenue in the third quarter fell 25% to ¥2.15 trillion from ¥2.86 trillion in the same period a year earlier. Meanwhile, operating profit melted: The maker of Bravia TVs and Walkman music players said it made an operating loss of ¥18 billion in the quarter compared with an operating profit of ¥236.2 billion in the same period a year earlier.
The third-quarter net profit slide was in line with the ¥10 billion forecast Sony issued last week, when it warned it now expects a ¥150 billion net loss this fiscal year, a reversal from a ¥369.4 billion net profit a year ago. That underscored the urgency of a global restructuring program Sony announced last December: cutting 16,000 jobs around the world half of them full-time -- Sony hopes to save ¥250 billion in costs in the next fiscal year starting April, while booking ¥170 billion in total charges to cover the cutbacks.
Losses in its TV operations remain a major headache for the company, one of the world’s biggest TV makers. At a briefing in
Chief Financial Officer Nobuyuki Oneda cited deteriorating pricing conditions and the strong yen as major reasons for the losses in the TV business. “We’ve got to plunge a scalpel into [TV] operations from now on,” said Mr. Oneda. He declined to say how much the company expects to lose on TVs in the fiscal full year through March.
Last week Sony said it will accelerate efforts to cut costs to turn the unprofitable but still core TV operations around. It plans to close one plant in
Underlining the problem, Sony said revenue from its TV operations fell 27% in the third quarter to ¥370 billion. Reflecting the depth of the problems in the global TV business, Sony said in a separate, joint statement with Japanese electronics peer Sharp Corp. that the pair will delay the planned establishment of a joint venture to produce and sell liquid crystal display panels by a year. The venture won’t now be set up until March 2010, they said.
Overall, Sony said the electronics segment of its operations made an operating loss of ¥15.9 billion in the third quarter, with revenue down in all businesses, including cameras and computers as well as TVs and audio equipment.
In a rare bright spot, it did manage to eke out an operating profit in its video games division of just ¥389 million, down 97% from ¥12.9 billion in the same period a year earlier. Sony’s earnings are based on
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