Sony Corp. reported its first annual net loss in 14 years and forecast a bigger loss this year, saying the pressure from sliding sales, competition in gadget prices and a strong yen was expected to continue. The Japanese electronics and entertainment company said Thursday it lost $1.72 billion in the January-March quarter, compared with a year-ago profit of $302 million. That brought its full fiscal year loss to $1 billion. Sony said no quick recovery was in sight, projecting a $1.2 billion loss for the fiscal year through March 2010. Like other Japanese exporters, Sony is reeling from a decline in sales overseas as well as in Japan, which is mired in its worst recession in decades. A stronger yen, which erodes overseas revenue and inflates production costs at home, has also weighed heavily on its bottom line.
Sales for the 2009 financial year fell 12.9 percent from a year earlier, to 7.73 trillion yen ($80.5 billion). The slump deepened in the most recent quarter, falling 22 percent, to 1.52 trillion yen ($15.9 billion). But those factors mask more fundamental problems at the manufacturer.
Once an electronics powerhouse and stylish innovator, Sony’s dominance has been usurped in almost everything it makes by rivals with sharper marketing and less expensive products that are easier to use. Meanwhile, Sony has lost money for five straight years in televisions, trailing Samsung Electronics of South Korea, which dominates major markets with a lean production and aggressive pricing. And now Vizio is number #1 in North America this quarter for LCD TV’s. The New York Times says a problem plaguing Sony is that it has focused on Japanese consumers willing to pay high prices for cutting-edge technology. Sony also makes many of its products in Japan, where production costs are high and vulnerable to currency swings.
Sony’s chief executive, Howard Stringer, has tried to shift emphasis away from hardware to networked products and services, but change has been slow. In an effort to speed up the process, Mr. Stringer announced a management reshuffling in March that replaced older executives with younger ones. He also redrew Sony’s corporate structure to encourage engineers from all projects to work together.
At the same time, Mr. Stringer has pushed ahead with aggressive cost-cutting, eliminating 16,000 jobs and reducing its network of 57 factories.
