Report: Sony to post first loss in 14 years

[keithlewis]

Japan's Nikkei business news says beleaguered electronics giant will end fiscal year with $1.1 billion operating deficit.

Dour economic tidings continue to pile up for PlayStation 3 purveyor Sony. Citing Japanese business news service Nikkei, Reuters reports today that the besieged Japanese electronics company is girding itself to post its first full-fiscal-year operating loss in 14 years, and only the second since the company went public in 1958.

According to Nikkei's report, Sony's operating loss for its fiscal year ending March 31 is expected to settle at around ¥100 billion ($1.1 billion). The figure stands in marked contrast to the company's forecasted operating profit of ¥200 billion ($2.2 billion). Nikkei notes that Sony's losses may soar to as high as ¥200 billion ($2.2 billion), depending on the company's performance from now until the end of its fiscal year.

The clearest indication of Sony's turbulent economic situation came in December. At that time, the Japanese company announced that it would slash up to 16,000 jobs as well close about 10 percent of its manufacturing facilities to save approximately $1.1 billion by the end of its fiscal year. Sony also said that it planned to cut investment by as much as 30 percent in its core electronics operations by withdrawing from unprofitable and noncore businesses.

Last week, The Times of London reported that Sony would soon implement "sweeping" and "sacred-cow-slaying" changes in the lead-up to its third-quarter fiscal report, which is expected January 29. Citing "company sources," The Times said that Sony was likely to expand upon the previously announced staff reductions, though no specific divisions were named as targets. Sony later refuted this report, saying that it had no plans to enact any further cost-cutting measures this month.

As noted by Nikkei, Sony's previous full-year operating loss came during its fiscal year ended March 1995, when the company took a substantial one-time charge related to its film business. As such, the expected loss would be the first attributable to the company's mainstay electronics division.

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