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Sony warns of first loss in 14 years

updated 07:40 am EST, Thu January 22, 2009

Sony Warns of Loss

Sony today warned (reg. required) that it will post its first loss for the past 14 years. The company confirmed rumors with expectations that its fiscal year, which finishes at the end of March, will see it lose the equivalent of a net $1.65 billion due both to a major drop in spending thanks to the poor world economy as well as an excessively strong Japanese yen that hurts the profit of sales outside of Japan. The move contrasts sharply with predictions made as recently as October of a similar amount in profit.

Most of Sony's factories are located in its home country and thus hurt the technology giant whenever the Japanese yen is strong, as prices are typically lower outside of Japan and don't necessarily make up for increases in labor costs at home.

The company's core electronic business is particularly hurt as its operating income should be about $3.82 billion lower than expected; the company is already forecasting that sales across all of Sony will be about 14 percent lower.

The shortfall is expected to force Sony to take more drastic action than plans announced in December, which themselves involved cutting 16,000 jobs and closing factories making largely obsolete technology. One of the company's Japanese TV manufacturing plants should be closed while restructuring costs should triple to about $673.82 million as the company slims down.

Sony's only previous net loss in its history was in 1995, when the cost of buying out movie studio Columbia Pictures pushed it below what would otherwise have been a profitable year.



By Electronista Staff
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  1. David Esrati

    Fresh-Faced Recruit

    Joined: Jun 1999

    +1

    CEO pay

    This is what happens when you abandon Japanese leadership and hand it over to an American style CEO/god- who demands a mega-paycheck.
    A Japanese CEO would be committing suicide before firing 16K people.
    Sir Howard will still be sipping champagne.

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