updated 08:18 am EDT, Thu May 1, 2014
Sony's biggest profits come from investments, insurance offerings
Electronics giant Sony has drastically cut its earnings guidance yet again. Sony's latest reduction marks its operating profit for the quarter down to 26 billion yen ($254.5 million) down from initial guidance, set last May, at 230 billion yen. This reduction brings the expected profit to just over 10 percent of its initial guidance, just two weeks before Sony announces the results for the full year.
Bayview Asset Management portfolio manager Yasuo Sakuma had this to say of the slash: "To be honest, I really wonder if [CEO Kazuo Hirai] got a grip on what's going on with all his businesses. Cutting forecasts at this time; are they trying to hide something or have they lost it?"
Sony is writing down another 30 billion yen on its shuttered PC division, which will grow the company's restructuring costs to 70 billion yen, three times what it is expecting in profit. Most of Sony's profits don't come from electronics, but rather from its financial and insurance departments. Sony's only electronics-related bright spot is the PlayStation 4, but due to high development costs, it will take at least a year to attain profitability.
Sony shares ended one percent higher on Thursday prior to the dramatic announceent. The stock has fallen one percent on the year, after a surge of 90 percent in 2013 from restructuring and appointment of Kaz Hirai as the new CEO. Full financial results are due in two weeks.