Sony Rated As ‘Junk’ As Losses Mount
The basket case of the consumer electronics industry Sony is set to report a A$2.4 Billion loss as consumers turn off buying their TV’s, smartphones and consumer electronics products.
The Company that has already bailed out of the PC market is set to report deeper net loss for the current fiscal year.
12 months ago Sony CEO Kazuo Hirai was claiming that his TV business was set to be turned around and that their mobile phone division which is struggling in Australia was set to start delivering profits, instead in the April-to-June quarter, its mobile phone division once a star performer for the company, posted an operating loss amid sagging sales.
This division is set to come under further pressure as Apple rolls out their iPhone 6 and Samsung launch new Android based smartphones.
Sony like they have done with other divisions has been forced to cut the value of its mobile communications unit after smartphone sales failed to meet expectations.
The company said it would hold a news conference from 0800 GMT to provide further details on the new forecast. Chief Executive Kazuo Hirai will attend the conference, Sony said.
Over the past 18 months, Sony’s shares have lagged rival Panasonic, which reported a profit last financial year after posting $15 billion in combined losses in the two years to March 2013.
In a statement, Sony said its latest plan had been “modified to address the significant change in the market and competitive environment of the mobile business.”
This is the sixth profit warning from the company, which made the announcement after Japanese stock markets had closed.
Analysts say that while the company faces a hard time returning its smartphone division to profit, it is not impossible.
“They are not the only smartphone vendors to be under a lot pressure,” Rachel Lashford from consultancy Canalys said.
Once an investor darling, Sony has also seen its credit rating reduced to junk due to its poor financial performance.
Under chief executive Kazuo Hirai – who took charge in 2012 – Sony sold off parts of the business deemed not central to the company’s operations, including its personal computer business
It also sold its US office building in New York for more than $1bn, and the “Sony City Osaki” premises in Tokyo, which had been its headquarters for six decades.
In addition, Sony culled 5,000 jobs from its computer and hard-hit television unit, which Mr Hirai has so far refused to sell because it is considered a core business.
In its search for new revenues, the company recently unveiled a new range of smartwatches and launched a smartphone that will allow gamers to integrate the device with its PS4 PlayStation console.