Sony unexpectedly forecast an annual loss, the sixth in seven years, casting further doubt on chief executive Kazuo Hirai's ability to revive the company.
The net loss will probably be 50 billion yen in the 12 months to March 31st, the company said in a statement today.
Sony said it would step up a broad restructuring thisear to tackle bloated costs and exit some unprofitable businesses, hoping to put behind it years of persistent losses.
The Japanese consumer electronics giant is struggling to recover after being undercut by nimbler Asian rivals in its key markets. Domestic peer Panasonic, by contrast, has turned around its business by embracing industrial products and pursuing more corporate clients rather than consumers.
Mr Hirai, who cut last year’s net-income forecast three times, is trying to overcome slumping demand for the TVs and personal computers that underpinned Sony’s rise into a Japanese icon. The company, which is cutting 5,000 more jobs and selling assets as it searches for new hits to build on its success with the PlayStation 4 game console, expects Y135 billion of costs related to restructuring and exiting the PC business this year.
"If Hirai were in the U.S., shareholders would call for his resignation," said Yasuaki Kogure, chief investment officer at Tokyo's SBI Asset Management, which holds Sony shares. "Mr Hirai will say he needs time, but the market can't wait. There will be growing concern about his ability."
The projected restructuring costs come on top of to the Y177.4 billion it spent last year, as it sells off its loss-making Vaio PC and disc storage businesses.
It forecast those costs will push it into a 50 billion yen net loss for the 2014/15 financial year, its sixth loss in seven years. Combined, these losses amount to nearly Y1 trillion.
“We’ll make this a year of biting the bullet on restructuring,” chief financial officer Kenichiro Yoshida told a briefing. “I’d like to finish restructuring this year.”
The sluggish pace of Sony’s turnaround had called into question chief executive Kazuo Hirai’s leadership after he failed to achieve his goal of restoring the flagship electronics division into the black. Sony had also cut its earnings guidance three times for the financial year that ended on March 31st last.
Analysts said the management now finally appeared committed to pushing ahead with changes, but doubts remained about the company’s ability to recover its earnings momentum.
"The markets are taking a positive view of its restructuring but the question is when its earnings will start recovering after that," said Rakuten Securities senior market analyst Masayuki Doshida. "The markets may think all the bad news has come out now, so I expect Sony shares to rebound after an initial fall."
Mr Yoshida was brought back to Sony late last year from So-net, a domestic Internet services subsidiary that had achieved healthy profit margins under his leadership.
He became chief strategy officer in December and chief financial officer in April, replacing executives appointed by Mr Hirai's predecessor, Howard Stringer. – Reuters / Bloomberg
