Sony slashes profit outlook on bad TV sales

City A.M. Reporter
SONY cut its full-year profit targets yesterday after slipping to a quarterly net loss as its recovering TV operation relapsed into the red.

The Japanese electronics-maker’s worse-than-expected performance, a setback after years of striving to return to its former glories, also featured weak sales of video cameras and a steep slump in personal computers in the July-September quarter.

With a quarterly net loss of ¥19.3bn (£122.4m), Sony’s bad news came in stark contrast to an upbeat showing by Japanese peer Panasonic. It also stirred doubts about how the best-known Japanese technology company can anchor a turnaround as rivals like Apple and Samsung Electronics have gained dominance through heavy investment in new mobile devices.

The TV operation flipped from a ¥5.2bn operating profit in April-June – its first quarterly profit in three years – to a ¥9.3bn operating loss.

Japan’s consumer electronics makers have long been affected by losses from their TV operations, hit by stiff competition from Asian rivals. Many, like Panasonic, have been shifting their focus to industrial businesses such as infrastructure or supplying the car industry, but Sony has stuck with its focus on the consumer business.

Overall, Sony cut its operating profit forecast for the year through next March to ¥170bn from previous guidance of ¥230bn, which would have been flat on the year.

Since chief executive Kazuo Hirai took the helm last year, Sony has promised a rebound in hardware with a three-pronged strategy focused on mobile devices, imaging technology and gaming.

But only a few of its consumer product divisions, including smartphones, showed signs of holding up in the latest quarter. Sony said it still expects to sell 42m smartphones this fiscal year, unchanged from its previous guidance.

There have also been signs of a strong debut next month in the US and other key markets for Sony’s new PlayStation 4 game console, based on preorders.

Sony, under pressure from major shareholder and hedge fund manager Daniel Loeb to generate more value from its entertainment division, also posted a ¥17.8bn second-quarter operating loss in its pictures division. Of eight divisions, only music and financial services units managed to boost profit from a year ago.