Fading TV sales pushes Sony into the red
Hampered by an appreciating yen that made its products more expensive outside of Sony's home country of Japan, revenue dropped 9% to $20.5 billion in the quarter ended Sept. 30 compared to the prior year. Its losses reversed a year-ago profit of $398.5 million, Sony announced Wednesday.
The red ink is expected to bleed into Sony's full fiscal year ending in March, resulting in a $1.2 billion loss. It previously had projected a $769 million gain.
Kazuo Hirai, a senior Sony executive who is widely expected to succeed Howard Stringer as the company's next chief executive, vowed to stanch the losses, particularly in the consumer electronics division, and bring Sony's finances back to health.
"I promise to lead the turnaround plan to get us out of the red," said Hirai, who was also tapped earlier this year to be the company's corporate face during another crisis when its computers were hacked, compromising millions of customer profiles.
Much of the losses stemmed from Sony's consumer electronics business, which posted a $449 million loss on $10.1 billion in sales, down 12.3% from a year ago. Sales of LCD TVs was particularly hard hit as competition from rivals such as Samsung, Vizio, Panasonic, Sharp and others drove down prices and as shoppers curbed their purchases in the face of a global economic slump.
Sony released a "TV Business Profitability Improvement Plan" that would slash the number of LCD TV sets the company produces a year to 20 million, down from the 40 million it had earlier projected.
Sony Pictures was the sole division to report a gain, but one that was primarily driven by a one-time sale of its Spider-Man merchandising rights for $278 million. The studio recorded a $268 million operating profit on $2.2 billion in revenue, up 17% from a year ago. Without the sale of Spider-Man, the division's financial results were essentially flat.
Strong showing of "The Smurfs" in theaters as well as higher sales of DVDs and made-for-cable TV shows helped to offset an overall decline in box office revenue, the company said.
Sony's music business got a lift from Adele's "21" album, but not enough to counter lower album sales outside the U.S. and the negative impact of an appreciating yen. As a result, sales fell 6.6% at Sony Music to $1.3 billion. The division posted $82 million in operating profit, down 22% from last year.
-- Alex Pham
Photo: The Smurfs. Credit: Sony Pictures.