Sony Loses $2.9 Billion, Restructuring Imminent

Kris Erickson • Jan 22, 2009 • Comments (0)

Sony announced today that it will post its first net loss since 1995. For fiscal 2008, the company is projecting an operating loss of $2.86 billion USD, and a total net loss in 2008 of 1.65 billion USD. This is much higher than previous analyst forcasts, which as recently as a week ago expected the company to report losses of $1.1 billion. Sony blamed much of the poor performance on a weaker-than-expected global economy and a strong Yen, which made Japanese consumer products more expensive in foreign markets.

"Consolidated sales and operating income for the second half of the fiscal year ending March 31, 2009 are expected to be significantly lower than the October forecast, primarily due to a deterioration in the business environment as a result of the global economic slowdown, the continued appreciation of the yen, the impact from the decline in the Japanese stock market and an increase in expected restructuring charges," the company said.

The worst hit division at Sony was the consumer electronics business, which suffered the most significant losses. Demand for Sony televisions was lower than expected as competition drove down prices, the company said. Only the film unit remained profitable in 2008.

The Sony games division also expected to post a net loss of $336 million USD for 2008. This was down from an earlier projected profit of $50 million USD. Sony said that the shortfall was due to competition and the rising value of the Yen against the Euro and Dollar.

The company has announced 16,000 job cuts already this year, or about 10% of its global workforce. More cuts are expected to come this week, as Sony announces plans to close television manufacturing plants in Japan. The company will hold a press conference later Thursday to discuss restructuring plans.