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Sony slashes earnings to 1.3 bln USD loss, as turnaround plan flounders

English.news.cn   2014-05-01 20:39:10

TOKYO, May 1 (Xinhua) -- Sony Corp. for the third time in a year slashed its earnings, saying Thursday it now expects a 130 billion yen (1.3 billion U.S. dollar) group net loss for the business year ended in March owing to slumping consumer demand for its electronics products.

The electronics giant said today in preliminary earnings report that a February projection for a 110 billion yen loss had been upwardly revised to 130 billion yen, from an initial projection of a 30 billion yen deficit made in October, as an aggressive turnaround plan by its chief has yet to show signs of reviving the struggling Tokyo-based firm.

Owing to slumping PC sales, Sony said it now expects to incur costs to the tune of 30 billion yen connected to its sagging PC businesses and a 25 billion yen write-off bill related to overseas disk manufacturing businesses.

Despite Sony's Chief Executive Officer Kazuo Hirai announcing a drastic turnaround plan in February, including the sale of its PC business, comprising its once ubiquitous Vaio models, to Japan Industrial Partners Inc., a private equity firm specializing in investing in turnaround, buyouts, and carve-out investments, and a plan to divide its money-losing TV unit, the company's full-year operating income came it at just 26 billion yen, almost 70 percent less than projections made in February.

Hirai, since his appointment as the firm's chief in 2012, has endeavored to redirect the firm's revival focus at the lucrative mobile devices market, with a forward-looking eye also on its well- established and internationally revered gaming and imaging products, but with sales for the past financial year totaling 7.77 trillion yen, around 1 percent higher than its initial forecast, analysts said the turnaround has been cumbersome.

"Without the disposal of under-performing businesses, Sony will repeat the same mistakes. The company should leave from commodity- type businesses. It has already left the PC market and that leaves TV," said Makoto Kikuchi, chief executive officer for Myojo Asset Management Co.

The possibility still exists, sources familiar with the matter said Thursday, that Hirai may still sell Sony's ailing TV business as he intimated in February, as plenty of viable offers have been floated to the company.

By way of comparison and adding increased leverage to potential buyers, in fiscal 2012, Sony, also known for its Xperia smartphones and PlayStation games consoles, posted a group net profit of just over 43 billion yen and an operating profit of topping 230 billion yen on sales of 6.80 trillion yen.

But, as local analysts have pointed out, the firm has turned to selling its assets in a bid to balance its books and generate quick, substantial one-off profits and culled personnel to try and trim costs, when a longer-term strategy mat have been called for.

Sony has made wholesale changes to its entertainment unit, which also saw major employment cuts at its Hollywood studio and said it aims to cut a further 250 million U.S. dollars in costs.

The consumer electronics behemoth also said in April it plans to sell its entire stake in Square Enix Holdings Co., a Japanese video game developer, publisher, and distribution company widely known for its role-playing video game franchises, for 15.3 billion yen, the equivalent of more than 8 percent of the video game maker 's issued shares.

Sony said today it will release its earnings forecast for the current fiscal year and results for fiscal 2013 on May 14.

Editor: Zhu Ningzhu
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