Tokyo: The holiday shopping season brought little cheer to Japan’s big-name electronics makers. Sony and Nintendo released results on Thursday showing their earnings fell in the October-December quarter, as both saw profits squeezed by the stronger yen. Sony said sales of its mainline electronic goods plummeted.
Another industry giant, Toshiba, said it slid into the red for the quarter and slashed its annual income projection.
Sony’s net profit fell 95 percent in the quarter, while Nintendo said its net income fell 18% in the nine months through December. It did not provide a quarterly breakdown.
The immediate outlook was also discouraging.
Nintendo, considered one of the bright spots among Japan’s struggling manufacturers cut its earnings estimate for the full fiscal year through March, and Sony repeated its forecast of its first annual net loss in 14 years.
“From the second half of September last year, there has been a sudden deterioration in the economy, and with the effects of foreign exchange it has had severe consequences on our business,” said Sony Chief Financial Officer Nobuyuki Oneda.
Sony’s net profit shriveled to ¥10.4 billion ($115.6 million) in the third quarter from ¥200.2 billion a year earlier. Revenue fell 25% to ¥2.15 trillion from ¥2.86 trillion.
Sony stuck with the forecast it released last week for a ¥150 billion net loss for the full fiscal year, a reversal from a net profit of 369.4 billion yen last year. The last and only time Sony reported a loss, for the fiscal year ending March 1995, the red ink came from one-time losses in its movie division, marred by box office flops and lax cost controls.
The latest quarter includes the year’s peak shopping season and is usually a big one for Japan’s electronics heavyweights. Sony’s electronics division generates over half of its total revenues with well-known products such as Bravia TVs, Cyber-shot digital cameras and Vaio computers.
But sales of such products fell nearly across the board as consumers held back, and Sony’s electronics division posted an operating loss of ¥15.9 billion versus a ¥200.6 billion profit a year earlier.
It was the first time the division has posted a loss in the October-December quarter.
The company has repeatedly warned of its troubled finances over the past few weeks, and the dismal numbers were in line with analysts’ forecasts. But many said the weakness in electronics was a troubling sign, as the division has long been a source of steady profits, even as other areas struggled.
Unlike Sony, Nintendo has little to worry about on the sales front.
Demand for its two main products the Wii gaming console and the DS handheld device is stronger than ever despite the deepening global slowdown. Both the Wii and DS smashed holiday and annual sales records in the U.S., and revenue would have been even better had the company not struggled with supply shortages.
The company expects to sell a record 26.5 million Wii units worldwide this fiscal year.
But consumer enthusiasm hasn’t been enough to keep Nintendo’s profit on track in the face of a stronger-than-expected yen, which has also dragged down rivals including Sony.
Nintendo surprised analysts Thursday by downgrading its full-year net profit forecast by 33% to 230 billion yen its second cut in three months and trimming its year-end dividend.
The company said it expects foreign exchange losses of about 200 billion yen this fiscal year, while Sony said foreign exchange movements have drained about 216 billion yen from its operating income so far this year.
Mia Nagasaka, an analyst at Barclays Capital in Tokyo, said the latest numbers confirm that while Nintendo’s core business remains “healthy,” the appreciating yen has seriously undermined its bottom line.
“It was a little bit shocking that they revised down their earnings forecast,” she said.
In recent months, the dollar has hovered near 90 yen after rising as high as 117 yen last year.
For the April-December period, Nintendo’s net profit fell to 212.5 billion yen from 258.9 billion yen a year earlier. Operating profit rose 27 percent to 501.3 billion yen, and revenue jumped 17 percent to 1.54 trillion yen.
The company did not provide its own quarterly breakdown, but based on calculations by The Associated Press, net profit for the October-December period tumbled almost 47 percent from the same period a year earlier to 67.6 billion yen, even while revenue climbed 12.5 percent to 699.5 billion yen.
Meanwhile, Toshiba Corp. said it sank into the red in the third quarter and expects a loss for the full year, as demand has fallen for its flash memory chips, used to store data in consumer gadgets like music players and digital cameras.
The Tokyo-based company reported a net loss of 121 billion yen for the October-December quarter, plummeting from the 80.5 billion yen profit it booked in the same period the year before. It said it now expects a net loss of 280 billion yen ($3.15 billion) for the fiscal year, radically revising an earlier projection of a net profit of 70 billion yen.
Toshiba also announced a turnaround plan which includes cutting 4,500 contract workers and delaying or canceling investments in massive new chip plants.