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Sony to post $3.2 bn annual loss on tax write-offs

Sony to post $3.2 bn annual loss on tax write-offs
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First Published: Mon, May 23 2011. 03 52 PM IST
Updated: Mon, May 23 2011. 03 52 PM IST
Tokyo: Sony Corp said it expected to post a $3.2 billion net loss for the year that ended on March 31 due to a write off on tax credits, the latest in a string of grim headlines for the consumer electronics giant.
The maker of PlayStation video games, Vaio computers and Bravia TVs has been battling to recover from the devastating Japan earthquake in March, and more recently, a series of computing hacking attacks that affected more than 100 million user accounts.
“I have been sceptical about Sony for a long time. Sony has been overtaken by Apple and other companies,” said Yuuki Sakurai, CEO and president of Fukoku Capital Management in Tokyo. “The management is not able to show shareholders the future of the company.”
Sony, once a symbol of Japan’s electronic and manufacturing excellence, has found itself outmanoeuvred by Apple in portable music and Samsung Electronics in flat-screen TVs and is facing a tough fight in video games with Nintendo and Microsoft .
Sony said it now expected a net loss of ¥260 billion ($3.2 billion) versus a previous forecast for a profit of ¥70 billion due to a “non-cash charge” of around 360 billion yen related to Japanese tax credits.
It is due to announce its full-year earnings on Thursday.
The net loss would be Sony’s biggest since 1995 and its second-largest ever.
The company stuck with its earlier forecast, issued before the March 11 earthquake, for an annual operating profit of ¥200 billion, which is broadly in line with consensus forecasts.
Clean slate
Sony said it expected sales to rise this year and forecast a net profit.
Some investors saw the revisions as a way for Sony to put the slew of bad news behind it and start with something of a clean slate.
“Sony sharply revised down its net forecast to a big loss to show that the impact of the earthquake has been largely factored-in during the previous financial year, while the impact would be limited for the current year,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
“Probably the company is expecting the global economy to recover during the second half of the year. Maybe this perception could be a bit optimistic, but we still have to wait and see.”
In its first estimate for the year to March 2012, Sony said its operating profit would also be around 200 billion yen.
The devastating earthquake and tsunami in March damaged Sony plants in northeastern Japan, snarled the global supply chain in several industries and triggered a plunge in domestic consumption.
Sony estimated the impact of the quake in the current year at ¥150 billion at the operating level.
Many rival corporations, including Panasonic Corp , have yet to issue forecasts for the current financial year to March 2012, due to uncertainty following the disaster.
Sony last month disclosed that it had been a victim of one of the biggest cyber-attacks in history.
It shut down its PlayStation Network across the globe in mid-April and has slowly started to restore access, starting in the United States. The company is still working with Japanese government authorities to restore access in that country.
Sony said “known costs” were estimated at ¥14 billion. Sony is targeting the end of May for fully restoring the affected networks.
Shares in Sony ended down 0.5% in a Tokyo market down 1.5%. It shares though have fallen 24% so far this year, compared with a 7% fall in the Nikkei average .
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First Published: Mon, May 23 2011. 03 52 PM IST