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Sony faces heavy losses, unsure of what to do to fix the problem

Suffering due to an extremely turbulent global economy, Sony has reported its first full-year annual loss in 14 years, also noting that the next fiscal year could keep the company in the red.

The company recently lost more than $1 billion in the fiscal year that ended on March 31, with a $1.26 billion loss expected through March 2010.  The forecast turned out to be better than Sony's anticipated $1.6 billion loss; however, analysts warn the next 12 months could be significantly worse than a $1.2 billion loss.

Sony also will close at least three manufacturing plants in Japan, with other job cuts likely in the future.  More than 16,000 workers across the world will ultimately lose their jobs due to the company's struggles.

The company hasn't publicly disclosed any plans on how it will try to turn around in the next 12 months, or if there is a plan in place.

"The company says some improvement may seen in the second half of the fiscal year, but I'm afraid it is too optimistic," according to Ichiyoshi Investment Management researcher Mitsushige Akino.  "The issue for the company is whether it can stop the losses in the TV segment.  Sony will have to cut more jobs, which must be done more boldly and quickly.  It needs more restructuring before it starts seeing an improvement."

Toyota, Hitachi, and several other Japanese companies also announced recent struggles, as the companies deal with a stronger Japanese yen, along with decreasing demand in Japan and internationally.  A stronger yen inflates domestic production costs while also diminishes export income made from foreign markets Sony targets.

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By Beenthere on 5/16/2009 1:48:21 PM , Rating: 2
Soon Congress will declare we're in an economic recession...




By Samus on 5/16/2009 2:07:59 PM , Rating: 2
Sony has virtually no manufacturing presence in the United States, so this virtually doesn't affect 'our' economy. This will be centralized mostly to Japan and China. We have our own problems, though.


By Sivar on 5/16/2009 2:31:56 PM , Rating: 5
While you may be right, I think many people would be surprised at just how linked our economy is with our trading partners.
For example, the "Buy American" chorus is, ironically, indirectly costing the U.S. economy in unexpected ways. For example, see:
http://www.washingtonpost.com/wp-dyn/content/artic...

Sony may not manufacture much here, and their freefall may have been a long time coming with or without the recession, but they sure sell a lot in the U.S.. I wonder what other effects their problems will have here.


By inperfectdarkness on 5/16/2009 4:51:42 PM , Rating: 3
wal-mart only became the spawn of satan when they ditched their "100% made in the USA" policy.


By foolsgambit11 on 5/16/2009 6:56:04 PM , Rating: 5
I agree that was a pretty poorly written article, with a pretty weak premise. For instance, the part about the (foreign-owned, US factory) steel manufacturer who lost a contract because their raw steel wasn't made in America: the article says that the raw materials aren't widely available in the U.S., but the group looking for the parts didn't seem to have any trouble finding a 100% US substitute.

Generally, I'm not a fan of the 'buy American' idea. I prefer to balance quality and price to find the product that meets my needs. But that must be tempered by some concerns about distortions of markets - restrictions on free movement of labor and inequality in basic workers' rights, to name a couple issues. (I'm not a fan of pure 'free market' ideas, per se, since they promote a 'race to the bottom' when it comes to workers' pay and rights.)

And so I agree with the Canadian spokesperson from the article who said that, since Canada competes with the US on fundamentally even footing, we shouldn't penalize them. I think many here would argue that Canada is actually at a disadvantage, what with their nationalized health care - although I think it is pretty much neutral, if not a slight advantage for companies.


By sinful on 5/16/2009 9:31:28 PM , Rating: 5
quote:
And so I agree with the Canadian spokesperson from the article who said that, since Canada competes with the US on fundamentally even footing, we shouldn't penalize them.

Agreed, for the most part. "1st world countries" are all on relatively equal footing.

quote:
I think many here would argue that Canada is actually at a disadvantage, what with their nationalized health care -


Canada's nationalized healthcare probably actually gives Canadian businesses an advantage, despite what many people would argue.

An interesting read:
http://en.wikipedia.org/wiki/Socialized_medicine

The system in the US actually puts quite a bit of the healthcare burden on our businesses.
A lot of companies, including GM, are major supporters of nationalized healthcare.
(Which isn't surprising, given that they spend $5 Billion/year on healthcare).


By foolsgambit11 on 5/17/2009 5:20:49 PM , Rating: 3
Re: health care. I totally agree with you. That's why I said that I thought it was either neutral or an advantage. But I know many of DT's vocal participants have a strong libertarian streak. Strong enough that they refuse to acknowledge that there are any arguments against their preferred political philosophy.

Libertarianism has lots to recommend it, but that doesn't mean that it is perfect. It is doubtful any self-consistent ideology is, and any non-self-consistent system could be considered imperfect by definition.

But back on Canadian health care, the only major issue that I object to about their system is the ban on private health care providers. I understand their arguments for it, but I still think the option should be open to those willing (and able) to pay extra.


By Uncle on 5/16/2009 8:05:10 PM , Rating: 2
Buy Canadian, thats a laugh, Can't buy anything Canadian, most everyday products we use are made in China.


By PrinceGaz on 5/16/2009 8:41:59 PM , Rating: 2
quote:
You might say "Buy Canadian" is a result of "Buy American", but the Euros are doing the same thing as well (with FAR more protectionist policies). So, it's not really clear that the Canadians are doing it just because we are, or whether they would have done it anyway .


Well I haven't heard of any specific European or Euro-zone policies which involve trade protectionism. In fact I think the general consensus here (in the UK at least) is that global free trade with no restrictions is the best way to end the recession sooner rather than later. If other European countries are planning on imposing duties, or other countries outside of Europe, it hasn't hit the main news here in the UK.

But then it probably wouldn't as most of the news here has for the past week been taken up with how our representatives in parliament have been abusing the allowances they can claim for, with things like a heli-pad, cleaning of a moat around their country-home, and high-end several-thousand pound home-cinema systems on the list of crazy expenses, which are supposed to be for items essential to their performing parliamentery duties.

In this recession, a few countries (including the US) might be thinking of introducing some level of protectionism in some markets, but no major country is realistically going to do so, either here in Europe, in the US, or the Far East, as it will just ensure the economic downturn lasts longer.


By sinful on 5/16/2009 10:16:37 PM , Rating: 2
quote:
Well I haven't heard of any specific European or Euro-zone policies which involve trade protectionism.


"We want to stop moving factories abroad, and perhaps we will bring them back. If we are to give financial assistance to the auto industry, we don't want to see another factory being moved to the Czech Republic."
- France's President Nicolas Sarkozy
http://www.spiegel.de/international/europe/0,1518,...

"The manner in which the German and French governments bailed out their banks was also not in the spirit of a common European competition policy. Anyone in Germany who wants to complain about French protectionism should try explaining the so-called "VW Law" to a Frenchman. "
http://www.spiegel.de/international/europe/0,1518,...

Granted, the UK is definitely not protectionist, but large elements of Europe still are.

And in general, protectionism does work - despite the rhetoric - but ONLY if you're the only one doing it.

In other words, if you can convince everyone else that protectionism is bad, and then you do it, you come out ahead.
It's only when everyone else catches on and starts doing it too that you end up worse off than if nobody did it all.


By BZDTemp on 5/17/2009 7:25:51 AM , Rating: 2
Pardon but while Germany and France are big countries they are only two of the EU nations. We are very close to being 500,000,000 souls in the EU and while Germany+France make up almost 1/3 they still do not speak for all nations nor does talk of protecting the auto industry cover all sort of goods.

Finally the "VW Law" is not about trade it is about ownership and really made to keep Porsche from taking over the VW group.

Still the EU is certainly not perfect and there are some strange import taxes which screws with some specific goods. Anyway I have a hard time really coming up with what the EU is buying from the US these days!

Cars - some but loads more are bought in Asia.
Computers - some perhaps but for the most part they also come from Asia. Maybe with us brand names like Dell/HP/Apple and so but a lot is really made in Asia.

It seems a lot of what is traded over the Atlantic is used by industries and not so much consumers so goods from the US are not so visible. Apart from the Coke on my desk and The Boss on my stereo :-)

Still some goods are moved back and fourth and I guess fx. the computers still count as coming from the US while being build in Asia. Here are the most recent numbers I could find:

Trade in goods

EU good exports to the US in 2007: €260 billion
EU goods imports from the US in 2007: €180 billion

Trade in services

EU services exports to the US 2007: €139.0 billion
EU services exports from the US in 2007: €127.9 billion

More numbers here: http://ec.europa.eu/trade/issues/bilateral/countri... (Interesting ones - not just bean counter stuff)


By crystal clear on 5/18/2009 8:12:41 AM , Rating: 1
quote:
And in general, protectionism does work - despite the rhetoric - but ONLY if you're the only one doing it


A slight correction to your statement- it should read like this...

"but you should know how to do it the right way.....also talk about the need for free markets & competition at economic forums, but at the same time practice a smart protectionist policy".

Example-

Manage your foreign exchange rates to your advantage whereby imports become expensive & exports become cheap.

Favourable taxation rates for companies exporting & or subsidizing exports.

Favourable interest rates & credit lines to exporting companies.

Creating a favourable investment climate for companies wishing to set up & or expanding manufacturing facilties in the country.

I can quote even more remedies similar to the above.

To summarize-

Job creation & Job protection is the solution to this economic crisis.

The U.K. like the U.S. is exporting jobs to other countries & importing their finished products.

When CEOs/Senior management etc export jobs to cut cost under the excuse to enable them be more competitive, when in fact they do it to award themselves huge salaries/perks/bonuses/retirement schemes etc .

Also when they import foreign labour/workers to replace the local people already working for the company etc.

Every country has the right to protect its own economic interest first,the smart way ofcourse.


By crystal clear on 5/18/2009 8:53:25 AM , Rating: 1
quote:
When CEOs/Senior management etc export jobs to cut cost under the excuse to enable them be more competitive, when in fact they do it to award themselves huge salaries/perks/bonuses/retirement schemes etc .


The smart way-

This can be stopped by cutting taxes for the lower levels of income earners, & covering up the difference in lost tax revenues by imposing even harsher/punitive taxation rates for these CEOs/Chairman etc.

When CEOs etc of loss making companies recieve huge bonuses,at a time they are firing workers/cutting jobs.
In such cases the harsh/punitive taxation measure/rates help in stopping this practice.

Punish the greedy & spare the ordinary worker is the attitude.


By Hiawa23 on 5/18/2009 11:25:24 AM , Rating: 2
I could be wrong but I thought I read that that Japan's largest customer/consumer was the US for their goods, & many Americans are not buying those TVs, electronics, PS3s like before so I am not surprised at the numbers for Sony but I expect they will turn around as the economy rebounds, not sure when the rebound is going to happen, though. This may be a reason why we have not seen a price drop for the PS3's current sku.


By callmeroy on 5/18/2009 8:07:59 AM , Rating: 2
With all respect to your comment, this is a global market place - it is a global economy...the days of isolation (of which America was "king" at btw for decades, and what other nations scoffed at us for as well) ended long ago.

Indeed one of the hindrances ("strains") on the economy of other nations was started because the United States economy went into the toilet. Like throwing a rock into a pond -- if you picture the rock as a nation's tanking economy and the pond as the world as a whole ---- you'd see how the ripple effect is widespread and can reach other nations.


By tviceman on 5/17/2009 1:09:58 PM , Rating: 2
Is this supposed to be a joke?


Grateful for the isolation.
By Earthmonger on 5/16/2009 5:20:31 PM , Rating: 3
There are times I miss the US, and times like this that I don't. We're not tied to the US economy here in Norway, nor to the EU. The worst effects of this "global economic crisis" are pretty shallow here, affecting primarily real estate.

The topic was Sony though. I don't see them climbing out of the hole this year, or even next year; too much competition and not enough people buying. A lot of smaller companies are falling off the grid unnoticed.




RE: Grateful for the isolation.
By ShaolinSoccer on 5/17/09, Rating: -1
RE: Grateful for the isolation.
By ShinGouki on 5/17/2009 3:29:01 AM , Rating: 5
I don't see anything in his post about wanting the US to fail... just a comment about Norway being decoupled economically from the US + EU.

Not sure how you turned that into a post about Empires falling and the mighty U.S of A bravely defending the worlds freedoms. :).


RE: Grateful for the isolation.
By AthalusNubie on 5/17/09, Rating: 0
RE: Grateful for the isolation.
By alifbaa on 5/17/2009 3:26:47 PM , Rating: 1
Yep. You're absolutely right. The Germans and Russians would have been much better than us Americans. Thank god the North Koreans and Vietnamese fought off our tyranny. Think of how much worse things would be there now!


RE: Grateful for the isolation.
By Earthmonger on 5/17/2009 7:54:31 AM , Rating: 4
Did you forget to take your meds today?

In a nutshell, I said I was glad we weren't being hit as hard as the US, economically. What does that have to do with empires or wanting the US to collapse? I was born in Illinois. I spent 26 years of my life in the US. There are things I miss about North America, and things I certainly do not.


By LRonaldHubbs on 5/17/2009 10:02:36 AM , Rating: 4
quote:
Am I right or am I right???

None of the above. You fail.


As bad as this seems...
By cplusplus on 5/16/2009 2:11:37 PM , Rating: 5
Panasonic lost $4 billion, NEC lost $3 billion, and Hitachi lost $8 billion. Makes this not seem quite as bad. Except if you compare it to Nintendo.

http://edition.cnn.com/2009/BUSINESS/05/15/japan.p...




RE: As bad as this seems...
By theflux on 5/16/2009 4:02:45 PM , Rating: 2
The difference is that those companies don't partake in the console war, and therefore don't have legions of dimwitted fanboys warring against them.


RE: As bad as this seems...
By BZDTemp on 5/17/2009 7:28:47 AM , Rating: 2
Best post of the day. Thank you.

Those fanboys seem to totally forget what a big company Sony is.


Not in touch with the little guy
By wallijonn on 5/18/2009 11:05:14 AM , Rating: 2
quote:
"The issue for the company is whether it can stop the losses in the TV segment. Sony will have to cut more jobs, which must be done more boldly and quickly."


If the problem is the TV division then their main competitors are probably Samsung and Panasonic. The difference between them and Sony is about $2000 when shopping for comparable HDTVs; Sony sets are just too high priced.

Firing workers is not likely to fix that. The problem is one of price. Either Sony gets out of the TV business or they price their products competitively.




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