updated 06:15 am EDT, Tue April 10, 2012
Sony takes $6.4 loss for 2011 fiscal year
Sony has revealed (pdf) that it will take a loss double its already previously dire prediction for 2011. As recently as last week it was expected that Sony would announce a $2.7 billion loss for the fiscal year ended March. Instead, it has surprised the market by announcing that it has suffered a record $6.4 billion loss, as it could no longer defer certain US 'tax assets.'
Providing investors some relief, Sony's revision of its consolidated results for is a 'non-cash charge' and will therefore not impact upon the company's cash flow as the write-off of the previously deferred tax assets was, in effect, a paper loss. Also, in a move to stem negative backlash from the market, the company also announced that following its restructure, which includes the slashing of 10,000 jobs, it expects to return to profit for the fiscal year ahead ending March 2013.
In the 'Cautionary Statement' appended to the end of its announcement, Sony says that its predicted return to profit will depend on the new 'One Sony' strategy being implemented by newly appointed Sony CEO and President, Kaz Hirai. This includes turning around its troublesome TV division which alone has bled a massive $10 billion over the past 10 years. Its recovery is also contingent on the success of Hirai's plans to continue delivering new product and service introductions while trying to break down internal barriers in order to achieve greater cooperation and synergy between its numerous corporate divisions.
Sony shares dipped 3.5 percent on the news and have almost halved in value over the last twelve months. It is hoped that Hirai, who had previously turned around the PlayStation division into a profitable enterprise, will be able to implement similar cost-cutting strategies while continuing to deliver innovative products and services that capture consumer interest, and ultimately, adoption. In the past few years it been unable to counter the challenge from Apple and Samsung, which have dominated the consumer technology sector in the way the embattled Japanese tech giant once did. [via Reuters]