Sony forecasts $975 mn net profit for current year

Sony forecasts $975 mn net profit for current year

Tokyo: Sony Corp forecast a lower-than-expected net profit for this year as the consumer electronics and entertainment conglomerate battles the after-effects of the disastrous March earthquake and a series of network security breaches.

Havoc to supply chains and the physical damage caused by Japan’s earthquake and tsunami has clouded Sony’s near-term prospects in its home market.

It forced the Japanese company on Monday to take a charge on tax credits that resulted in a $3.2 billion net loss for the business year just ended, its biggest deficit since 1995 and the second worst on record.

The latest travails for the maker of PlayStation video games, Vaio computers and Bravia TVs come as it struggles to regain a market lead lost to Apple Inc in portable music and Samsung Electronics in flat-screen TVs.

Sony on Thursday predicted an ¥80 billion ($975 million) net profit for the year that started April 1, compared with analysts’ consensus of ¥105 billion, according to Thomson Reuters StarMine SmartEstimates, which places more weight on recent forecasts by top-rated analysts.

It expects to make an operating profit of ¥200 billion this business year, reiterating guidance given earlier in the week, which helped its shares rise.

But some think those forecasts might be too ambitious.

“Looking at their forecast, it appears Sony is expecting a recovery in the latter half of the year, which is a bullish forecast, but there’s a lot of uncertainty and there is a risk they come in below that expectation," said Koji Takeuchi, senior economist at Mizuho Research Institute.

“It is still unclear what the financial burdern of the security breach will be."

The company said it would get some production re-started at the worst-damaged of its plants in northern Japan over the next two months, but that the disaster would continue to affect units from TVs to cameras, cutting operating profit by 150 billion yen over the year.

“Although most of the ¥150 billion effect will be in electronics, there will be an impact on almost all product categories," chief financial officer Masaru Kato told reporters. “Those that are likely to be worst hit are televisions, digital cameras and devices," he added.


Sony said its liquid crystal display TV business was likely to stay in the red for an 8th straight year.

Sony is also reeling from one of the biggest ever Internet security breaches, which forced it to close its PlayStation videogames network for nearly a month after data on more than 100 million user accounts was leaked.

On Tuesday Sony said additional websites in four countries had also been hacked. Among the break-ins, personal information for 8,500 people was leaked from its Greek Sony Music Entertainment website.

Sony said on Monday it expects the hacking to drag down operating profit by ¥14 billion in the current financial year, including costs for boosting security measures. It said it was aiming to restore its PlayStation Network in full by the end of May.

Worries about both incidents have weighed on Sony shares, which have fallen by almost a quarter this year, three times the fall in the Nikkei average . The stock closed up 0.1% on Thursday ahead of the announcement, compared with a 1.5% gain in the benchmark.

During the year ending 31 March, the company predicted that it will sell 15 million of its flagship PlayStation 3 game compared with 14.3 million in the year just ended. Sony reiterated its plan to release a next generation portable games device by the end of 2011.

It forecast liquid crystal TV sales of 27 million units compared with 22.4 million sets in the previous term, but declined to say whether it expected the unit to be profitable.