Sony's struggles continue as losses widen in Q1

Agence France-Presse

Posted at Aug 02 2012 05:54 PM | Updated as of Aug 03 2012 01:54 AM

TOKYO - Sony said Thursday its fiscal first-quarter net loss widened to 24.6 billion yen ($313.5 million) while it cut its profit forecast for the year as the struggling Japanese firm overhauls its business.

The consumer electronics and entertainment giant's latest loss dwarfed the 15.5 billion yen shortfall it reported in the same period a year ago.

Quarterly revenue rose 1.4 percent to 1.51 trillion yen while the company said it squeezed out an operating profit of 6.28 billion yen.

Sony also said it now expected a 20 billion yen full-year profit, down from an earlier projection of 30 billion yen for the year through March 2013.

"The operating environment for Sony in the first quarter... continued to be severe due to factors including a slowing of the global economy and entrenchment of the appreciation of the yen exchange rate," it said in a statement.

Sony said it lowered its full-year profit forecast "in anticipation of a severe operating environment from the second quarter onward resulting from uncertain foreign exchange rates and trends in the global economy".

Japanese exporters including Sony have been hammered by a strong yen -- which hit record highs against the dollar late last year and remains strong -- because it makes their products pricier overseas while shrinking the value of their foreign-earned income.

In April, Sony said it would cut about 10,000 jobs and spend nearly $1.0 billion on an overhaul that its new chief Kazuo Hirai described as "urgent".

Sony has vowed a return to the black after losing 456.66 billion yen in the year to March, its fourth consecutive annual loss.

The losses have been particularly acute in Sony's television business, where Japanese electronics firms have been hurt by a strong yen, shrinking profit margins and stiff competition from foreign rivals.

Piracy has threatened its music and film assets while Sony was also hurt by last year's quake-tsunami disaster.

As part of the overhaul, Sony said in June it would sell its chemical products division for about 58 billion yen, while teaming up with rival Japanese electronics giant Sharp on developing televisions with advanced technology.

Despite a long-standing rivalry, the firms said they would aim to establish mass-production technology for organic light-emitting diode (OLED) television panels next year, as they try to recover from multi-billion-dollar losses.

The technology lets producers make TVs that consume less power while offering a sharper picture than conventional flat panels, and is expected to be one of the dominant technologies in next-generation televisions.

However, the industry has struggled to find an economical way to develop larger screens equipped with the technology.

In June, Sony shares tumbled below 1,000 yen for the first time since 1980 and the era of the Walkman, sending the value of the company crashing to less than a tenth of what it was just over a decade ago.

On Thursday, Sony shares closed up 2.44 percent at 964 yen with the earnings results published after markets closed.

© 1994-2012 Agence France-Presse