Sony said today that its net profit plunged 95 percent in the October-December quarter, as the holiday shopping season provided no respite for the struggling electronics giant and tepid sales of TVs, digital cameras and mobile phones hit its bottom line.
TOKYO (AP) — Sony said Thursday its net profit plunged 95 percent in the October-December quarter, as the holiday shopping season provided no respite for the struggling electronics giant and tepid sales of TVs, digital cameras and mobile phones hit its bottom line.
The Japanese manufacturing icon said its usually dependable electronics division posted its first-ever operating loss for the fiscal third quarter. It also reiterated its forecast for a net loss of 150 billion yen ($1.67 billion) for the full fiscal year through March — its first loss in 14 years.
Sony Corp. said net profit shriveled to 10.4 billion yen ($115.6 million) in the third quarter from 200.2 billion yen a year earlier. Revenue fell 25 percent to 2.15 trillion yen from 2.86 trillion yen.
The quarter includes the year’s peak shopping season and is usually a big one for its core electronics division, which generates over half of total revenues with well-known products like Bravia TVs, Cyber-shot digital cameras and Vaio computers.
But sales of such products fell nearly across the board as consumers held back, and Sony’s electronics division posted an operating loss of 15.9 billion yen, versus a 200.6 billion yen profit a year earlier.
The company has repeatedly warned of its troubled finances over the past few weeks, and the dismal numbers were in line with analysts’ forecasts. But many said the weakness in electronics was a troubling sign, as the division has long been a source of steady profits, even as other areas struggled.
David Gibson, an analyst at Macquarie in Tokyo, pointed to a buildup in Sony’s inventories as it failed to move its products.
“TVs really dragged them down during the period,” he said.
The poor showing in electronics caused Sony’s operating profit, which is generally seen as the best indication of a company’s pure business performance but excludes taxes and other items, to fall to a 18 billion yen loss during the quarter.
Sony generates nearly 80 percent of its sales abroad, making it vulnerable to a strong yen, which cuts into its profits from overseas. Japan’s currency has hovered near 90 yen to the dollar in recent months after rising as high as 117 yen last year. So far this fiscal year foreign exchange movements have taken about 216 billion yen from its operating income, it said.
News from other big Japanese electronics exporters Thursday was also disappointing. Toshiba Corp. said it sank into the red in the third quarter and expects a loss for the full year, while game maker Nintendo Co.’s quarterly net profit fell 18 percent on the strong yen, forcing the company to reduce its full-year forecast.
Last week, Sony projected a 150 billion yen net loss for the full fiscal year, a reversal from the net profit of 369.4 billion yen last year. The last — and only — time Sony reported a loss, for the fiscal year ending March 1995, the red ink came from one-time losses in its movie division, marred by box office flops and lax cost controls.
Tokyo-based Sony has announced some restructuring measures, including cutting 8,000 of its 185,000 jobs around the world and shuttering five or six plants – about 10 percent of its 57 factories.
But Chief Executive Howard Stringer told reporters last week that he had not gone far enough with cut costs and would work harder to combine the company’s diverse businesses, which also include its movie division and PlayStation game console business.
Sony also said that due to the poor economic conditions, it would postpone by a year establishing a joint venture with Sharp to make liquid crystal display panels for thin-screen TVs, and now aims to do so by March of 2010.
The company’s stock rose 4 percent to 1,909 yen. The results were announced after trading closed.