Sony posts $5.6-billion loss, 10% drop in sales
Sony Corp. posted a record $5.6-billion annual loss Thursday, ending a fiscal year marred by global economic turmoil and the after-effects of last spring's earthquake and tsunami in Japan and last fall's floods in Thailand.
The consumer electronics and media giant, which is in the midst of a top-to-bottom reorganization, said revenue fell 9.6% to $79.2 billion in its fiscal year ended March 31, down from $87.8 billion last year. Sony lost $5.6 billion, or $5.55 a share, nearly double the prior year's loss of $3.2 billion.
About $3.2 billion of red ink recorded for the fiscal year just ended came from a paper loss it incurred by writing down deferred tax assets. Sony had warned investors in April of the expense hit, as well as the drop in sales.
Much of last year's revenue decline was due to a steep 18.5% drop in the sales of its LCD television sets, digital cameras, personal computers and PlayStation games businesses, which made up close to half of Sony's total revenue.
Its TV and games business suffered from severe competition from lower-cost rivals that forced the company to slash prices. Meanwhile, sales of digital cameras and PCs fell after an October flood in Thailand left factories idle for weeks. The company estimated that it lost sales of $170 million while its facilities were undergoing repairs that cost $160 million.
Sony's movie business blunted the losses in electronics, recording a $416-million operating profit on $8 billion in sales. A 9.6% uptick in revenue for Sony Pictures came from its television business as well as growth in video-on-demand sales and a sale of its share in the royalties from Spider-Man merchandise.
Its music business marked a 6% drop in sales to $5.4 billion from $5.7 billion a year earlier as CD sales continued to erode. Operating profits dipped 5.2% to $450 million, down from $475 million the year before.
Its new chief executive, Kazuo Hirai, has vowed to turn things around, telling investors that "Sony will change." Last month, the company said it would eliminate 10,000 jobs. The announcement followed a corporate realignment that demoted its once-sacred television business. Instead, the company would focus more on games, digital imaging and mobile products.
As a result, Sony forecast that it would grow revenue 14% in the current fiscal year with its factories humming again. It also projected a modest $366-million profit for the year, thanks to aggressive cost-cutting and a greater emphasis on higher-margin products such as medical imaging equipment.
-- Alex Pham
Photo: Kazuo Hirai, Sony's new chief executive, at the 2012 Consumer Electronics Show in Las Vegas. Credit: Ethan Miller / Getty Images