Sony Slashes Outlook to Loss
In its second downward revision in just three months, the Japanese tech giant said Thursday it now expects to lose ¥110 billion ($1.1 billion) in the full year through March—a grim reversal from a previously forecast profit of ¥30 billion. The company also confirmed reports that it is in talks to sell its Vaio PC business to turnaround fund Japan Industrial Partners Inc., adding it hopes to complete the transaction by July 1.
Sony also said it has decided to split off its TV business and operate it as a subsidiary. For the full year, Sony now expects to log losses from the TV business totaling ¥25 billion.
Sony said it would trim 5,000 jobs—1,500 in Japan and 3,500 overseas—by March 2015.
The moves underscore Sony’s continuing struggle to turn around an electronics business that is bleeding cash—in particular its big TV and PC businesses. The Japanese tech giant achieved global fame—and decades of profits—with innovative devices such as the Walkman portable music player and Trinitron TV.
But in recent years, such devices have been losing billions of yen a quarter, forcing Sony to cut jobs and close plants. Under Chief Executive Kazuo Hirai Sony has sold off noncore assets while shifting the firm to focus on specific growth areas including mobile devices, videogames and digital cameras.
Still, investors and analysts frustrated with the slow pace of recovery have called for drastic action, including sales of unprofitable divisions and more cuts in costs through additional layoffs and plant closures.
For the October-December quarter, Sony said it posted a net profit of ¥27 billion compared with a loss of ¥10.8 billion a year earlier, boosted by a weak yen and strong sales of its PlayStation 4 game console. The company had earlier said PS4 sales topped 4.2 million units since its Nov. 15 launch through end of December, putting it well on track to beat its 5 million target by March.
With the latest slew of restructuring steps, investors are hoping Mr. Hirai can focus more on putting the company back on a growth track. Since taking over in 2012, Mr. Hirai has sought to rekindle Sony’s freewheeling spirit that had led to the birth of cool gadgets in the past. Those efforts have paid off in new products ranging from the Xperia smartphone to QX lens cameras that can be attached to smartphones.
But analysts say even cutting-edge gadgets may not contribute much to boosting revenue unless a blockbuster hit comes out. And while Sony’s ultrahigh-definition TVs are selling well, such higher-end products won’t immediately fill the void left by declining sales of mass-volume consumer products.