Sony warns of second consecutive net loss

Sony said it would step up a broad restructuring this year to tackle bloated costs and exit some unprofitable businesses, hoping to put behind it years of persistent losses.

The Japanese consumer electronics giant, which warned today of a second consecutive net loss for this financial year, 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.

Sony said it would spend 135 billion yen (€962 million) on restructuring in the year to March 31st, adding to the 177.4 billion yen it spent in the previous 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 1 trillion yen. “We’ll make this a year of biting the bullet on restructuring,” Chief Financial Officer Kenichiro Yoshida told an earnings 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.

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."

Reuters