Sony Posts $1 Billion Operating Loss

The slowdown of the global economy, coupled with a decline in the Japanese market and the appreciation of the yen, forced Sony Corp. to report its first annual loss in 14 years.  And the outlook for the next year remains bleak, news reports say.

 

The Tokyo-based company reported a 2008 fourth-quarter loss of $1.72 billion. And going forward, Sony expects to post a net loss of about $1.26 billion in the next fiscal year ending in March 2010, The New York Times reports.

 

In the gaming business, the company said it had fewer sales of PlayStation 3 and PlayStation Portable machines. However, the manufacturer said it expects sales in that space will improve this year. Meanwhile, Sony’s television business continues its downward turn for the fifth straight year, the company reported.

 

To help its bottom line, Sony announced it would consolidate some of its manufacturing sites in Japan for certain product categories to boost efficiency. The closures would spread across four locations in Japan and four outside the country, Sony said. In another cost-cutting move, company CEO Howard Stringer announced plans in December to eliminate 16,000 jobs. And in March, Stringer reshuffled the management team and replaced older executives with younger staffers in an effort to breathe new life into the company, according to The New York Times report.

 

Sony, once considered a hip innovator of electronics products, in recent years has been outpaced by other companies that make less expensive products. Analysts said the company needs to develop top products once again in order to rebound. It’s certainly trying.

 

Last fall, Sony rolled out new products to support the Apple’s popular iPod and iPhone (News - Alert) devices. In addition, the firm was preparing to launch the world’s thinnest LCD high-definition TV (HDTV) in Japan to attempt to cash in on consumers’ love affair of LCD technology.

 

"Their outlook gave me the impression that their business is heading for a gradual recovery,” Fujio Ando, senior managing director at Chibagin Asset Management, told Reuters (News - Alert). “But it would all depend on whether they will be able to start making popular products because right now they have no 'No. 1' product."

 

Sony’s news comes as little surprise as business and government spending on technology globally was expected to dip by 3 percent this year, according to a Forrester Research report. That report says that computer, software and communications products and consulting services is expected to drop for the first time since 2002.