Sony Ups Annual Net Loss Prediction to $6.4 Billion USD
April 10, 2012 10:36 AM
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Sony CEO Kazuo Hirai
The increased loss is due to writing off 300 billion yen of deferred tax assets mainly in the U.S.
For Sony, it seems bad news is only followed by more bad news lately, and it looks like that's not changing anytime soon as the company predicts greater annual losses.
Sony announced today that it sees a $6.4 billion annual net loss due to deferred tax credit write-offs.
In February, Sony predicted an annual net loss of 220 billion yen ($2.71 billion USD) for the year ending March 2012. Now, in its fourth revision of these estimates, Sony has upped the loss to 520 billion yen ($6.4 billion USD) due to writing off 300 billion yen of deferred tax assets mainly in the U.S. The company, however, still predicts an annual operating loss of 95 billion yen ($1.17 billion USD).
Sony's issues stem from its inability to compete with tech giants like Apple and Samsung, and also from its
struggling LCD TV business
Sony's LCD TV business has had eight straight years of consecutive losses, which led the company to shake up this division last year in hopes of turning the situation around. Ultimately, Sony decided to
sell its 50 percent manufacturing stake to Samsung
in their LCD TV joint venture called S-LCD Corporation.
Things didn't get much better from there. In February, Standard & Poor's Ratings Services provided an unfavorable outlook on Sony's long-term corporate credit rating,
knocking the long-term corporate credit and senior unsecured debt ratings down
from an "A-" to a "BBB+."
To make matters worse, the tech company just announced yesterday that it
plans to cut 10,000 jobs
, or 6 percent of its global workforce as soon as the end of the year.
Sony's new CEO, Kazuo Hirai, who took on the role beginning April 1, now faces the challenge of turning the company around. Just last month, Hirai said he was still dedicated to the TV unit and
plans to take it on himself
Other major company changes included a shake up in those who oversee different units, and shifting the company's focus to three new "core pillars," which include digital imaging, games and mobile.
The actual results for Sony's annual net loss will not be released until May 21. Despite these poor predictions, Sony has tried to comfort investors with current to the year ending March 2013 predictions, which it sees an operating profit of 180 billion yen ($2.2 billion USD).
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Could not have happened to a nicer company.
4/10/2012 12:01:45 PM
Sony's lesson should be that if you piss your customers off enough, it eventually hits your bottom line, regardless of how big you are.
"Let's face it, we're not changing the world. We're building a product that helps people buy more crap - and watch porn." -- Seagate CEO Bill Watkins
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