Summary:
Sony Forecast for FY2010 (ending March 2010):
DTV units flat YoY at 15M
units
PS3 units represents 30% growth to 13M units
Digital Camera sales expected to decline 10% to 20M units
Overall revenues to decline 6% YoY
Sony Sees Losses
Growing This Year
TOKYO – Sony
Corp. reported a $1 billion loss for the fiscal year ended March, its first net
loss in 14 years, and said losses would get bigger this year due to slumping
sales of televisions, digital cameras and other electronics.
The Japanese electronics
conglomerate said it would ramp up cost-cutting measures and shutter more
factories this year. Sony, along with other electronics firms, has been crippled by a global
economic slowdown. As demand cooled in 2008, Sony slashed prices of TVs, video
players and cameras to prevent inventory from stacking up. But Sony struggled
to cut its costs in line with falling prices, leading to its first annual loss
in 14 years.
The conglomerate sees another year
in the red. Thursday, it forecast a net loss
of 120 billion yen ($1.26 billion) in the fiscal year ending March 31, 2010
compared with a 98.9 billion yen loss for the fiscal year just ended. It would
mark the first consecutive annual losses in Sony's corporate history. A year
ago, it reported a profit of 369.4 billion yen.
For the quarter ended March 31,
Sony posted a net loss of 165.1 billion yen versus a year-ago profit of 29
billion yen, due mostly to a 294 billion yen loss at its electronics division.
Sony's sales fell 22% in the quarter.
At the onset of a slowdown in
December, Sony announced plans to eliminate about 16,000 jobs from its
electronics division and close about six factories in order to cut 250 billion
yen in annual costs. Now, it plans to do more.
The Japanese electronics
conglomerate plans to close four plants in Japan
and shutter, or sell, factories in the U.S.,
Mexico, Indonesia and France, with job cuts exceeding
16,000 workers. Sony Chief Financial Officer Nobuyuki Oneda said there will be
even more closures and job cuts in the future.
"As far as the restructuring
measures go, it's not that we're doing anything that different. We are just
going one more step," said Mr. Oneda at a news conference.
Sony says it now aims to cut costs
by more than 300 billion yen. It will manufacture more products outside of Japan,
where costs are reduced and, in some cases, not produce the goods at all,
relying instead on contract manufacturers.
The responsibility for Sony's
restructuring falls on Chief Executive Howard Stringer, who wrested away the
title of president last month from Ryoji Chubachi as part of a management
shuffle that put him in charge of the company's electronics division.
In the longer term, Sony must
invigorate a product line-up that has turned staid in recent years. The new must-have products, according to Mr. Stringer,
are networked devices, or electronic gadgets that link to a host of Web
services, such as Amazon Inc.'s Kindle electronic reader.
The Kindle's success strikes at
the heart of Sony's troubles. Sony's own eBook reader was available a year
before the Kindle but has failed to become a hit. Unlike the Kindle, Sony's
eBook doesn't have wireless connectivity or offer access to newspapers or
magazines.
Demand for Sony's mainstay
electronics products also is flagging. It expects
liquid-crystal television sales to remain basically flat in the fiscal year to
March 31, 2010 at 15 million units. Sony says it sees that business
continuing to lose money until October when it will start breaking even. Digital camera sales are expected to fall 10% to 20
million units.
For its PlayStation
3 game machine, Sony forecasts sales of 13 million units this fiscal year
compared with 10 million last year. While Mr. Oneda declined to comment about a
potential price cut for the PS3, the target of a 30% sales increase --
considering that sales rose 10% last year – is likely to require a price
cut.
Sony said it expects revenue to
fall 6% to 7.3 trillion yen in the current fiscal year, while its operating
loss will be 110 billion yen. The company's forecasts for this fiscal year are
based on assumptions that the yen will trade at 95 yen to the dollar and 125
yen to the euro.