Tokyo: Japan’s Sony Corp. will probably post its first annual loss in 14 years as a stronger yen and global recession force the world’s second largest maker of consumer electronics to lower its forecasts.
The firm will probably abandon its 150 billion yen (Rs8,330 crore) profit forecast and project a net loss of 74 billion yen for the year ending 31 March, according to a Bloomberg survey of five brokerages. Sony is scheduled to disclose its latest projections and details of a reorganization plan by next week.
Chief executive officer Howard Stringer plans to slash 16,000 jobs, trim investments and shut factories as recessions in Europe, Japan and the US force consumers to hold back spending. “A forecast cut is something we have expected, but it’s not an issue unique to the company because it’s a problem for the entire consumer electronics industry,” said Kazuharu Miura, a Tokyo-based analyst at Daiwa Institute.
Sony is preparing to release details of a restructuring plan on Wednesday or Thursday, the Financial Times (FT) reported. Stringer’s job cut plan, announced in December, faces opposition from an old guard of managers at its electronics business, FT said, citing an unidentified?person.?Sony spokeswoman Mami Imada declined to confirm or deny the report.
Sony’s stocks dropped 1.8% to close at 1,989 yen on the Tokyo Stock Exchange, while the benchmark Nikkei 225 Stock Average fell 2%. The stock slumped 69% in 2008, after rising for four straight years.
Sony will cut 16,000 employees, including 8,000 part-time workers, by March 2010 and spend 30% less at the electronics division than planned under its mid-term strategy, the company said on 9 December.
The maker of Bravia televisions and Cyber-shot cameras will also reduce the number of factories by around 10% from the current 57, it had said.
The net loss would be the first since the year ended March 1995, when Sony posted a deficit of 293.4 billion yen. Sony, scheduled to report results on 29 January, earned net income of 369.4 billion yen last fiscal. Sales may fall 6.6% to 8.29 trillion yen, less than the company’s projection of 9 trillion yen, the survey showed.
The company will probably shift to an operating loss, or sales minus the cost of goods sold and administrative expenses, of 70 billion yen, missing its forecast for a 200 billion yen profit, based on the analyst projections.
The yen soared 24% against the dollar and 30% to the euro last year, the best performer among 16 major currencies tracked by Bloomberg. A stronger yen damps the value of overseas earnings when repatriated.