Sony said Wednesday it booked a deep loss during its fiscal second quarter ended 30 September and now expects to be in the red for the entire year, weighed down by poor sales of its TVs and the strong yen.
The Tokyo-based company held its targets for its game business and said it is still on track to sell 15 million units of PlayStation 3 and 6 million PlayStation Portable units in the fiscal year through March. Sony sold more of both devices during the July-September quarter than it did a year ago, spurred in part by price cuts during the summer, but it said the cuts also contributed to its drop in profits.
During its second quarter, Sony had a ¥27 billion (£216 million) net loss, down from a ¥31 billion (£248 million) profit in the year-earlier period, even though sales were down just 9 percent. The company now expects to lose ¥90 billion (£721 million) for the fiscal year, after saying in July it could make a ¥60 billion (£481 million) profit.
Four years of losses
The loss of over a billion dollars would mark Sony's fourth straight year in the red. Kaz Hirai, who heads the company's massive consumer products division and is widely seen as next in line to lead the company, said he will focus on reviving the company's TV operations, in line with a new restructuring plan.
"The TV business is a crucial part of Sony's growth strategy moving forward," he said at a post-earnings news conference in Tokyo.
"The entire management at Sony feels a strong sense of crisis. I will be the leader as we implement a profit turnaround plan for the TV business and urgently try to return to profitability."
Sony is ramping up for the launch of the new handheld PlayStation Vita console, but its main handheld competitor Nintendo has stumbled in its launch of the rival 3DS handheld. Nintendo was forced to slash prices less than six months after its launch earlier this year and has booked deep financial losses as a result. The Vita, due out in December in Japan, and in February in the U.S. and Europe, will feature advanced graphics and processing, a touch screen, multiple stick controls, and a rear touchpad.
High yen hurts profits
Like other Japanese manufacturers, Sony has long struggled to make its LCD (liquid crystal display) TV business profitable against foreign rivals like Samsung and Vizio, and said that in the latest quarter its bottom line was hurt by higher costs per sale and lower margins. Executives have refused to consider abandoning the business, saying it is central to the company's existence as a consumer electronics manufacturer, though it is now restructuring and news reports say it may turn to buying more panels from outside manufacturers.
The company announced a turnaround plan for its TV business, which includes a continued shift to focusing on profits over units sold. Sony said it will abandon a plan to sell 40 million TVs worldwide next fiscal year and instead aim for 20 million, and will take steps such as reconsidering its panel producing venture with Samsung.
The firm has also struggled with the high yen, which hurt profits on foreign sales. In the first six months of this fiscal year, while the yen hit record highs, Sony derived over 70 percent of its revenues from overseas. It has also been hurt by the flooding in Thailand, which forced stoppages at some of its factories and the delay of product launches during the quarter.
One bright spot for the quarter was its movie business, which received a boost from the sale of merchandise rights to its Spider-Man franchise.