Sony reports $1B annual loss, first in 14 years

[Rev]

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Sony is closing 3 plants and laying off 16,000 people.

 

 

 

 

article:

 

 

TOKYO (AP) -- Sony Corp. reported its first annual net loss in 14 years and forecast a bigger loss this year, saying the pressure from sliding sales, competition in gadget prices and a strong yen was expected to continue.

 

The Japanese electronics and entertainment company said Thursday it lost 165 billion yen ($1.72 billion) in the January-March quarter, compared to a 29 billion yen profit for the same period the previous year. That brought its full fiscal year loss to a 98.9 billion yen ($1 billion).

 

Sony, which makes Bravia flat-panel TVs and Cyber-shot digital cameras, said it is closing three plants in Japan to help turn its business around. It is also in the midst of cutting 16,000 workers.

 

Sony said no quick recovery was in sight, projecting a 120 billion yen ($1.2 billion) loss for the fiscal year through March 2010.

 

It joins a string of other big Japanese corporations, including Toyota Motor Corp. and Hitachi Ltd., that have announced huge losses and bleak outlooks.

 

Also Thursday, Sanyo Electric Co. said it booked a net loss of 93.2 billion yen ($976 million) for the fiscal year, compared with a 28.7 billion yen profit the year before. It expects to turn a small profit of 7 billion yen this year.

 

Sanyo is being acquired by Panasonic Corp., which is also expected to announce dismal earnings Friday.

 

Analysts say Chief Executive Howard Stringer, who decided to center power in his position earlier this year by also becoming president, has yet to give details of a turnaround plan, including strategies and products.

 

Stringer, a Welsh-born American and the first foreigner to head Sony, has promoted four relatively young Japanese executives onto his managerial team. Representing the company's gaming and electronics sectors, they aim to take advantage of Sony's sprawling empire to differentiate it from a host of rivals such as South Korea's Samsung Electronics Co. and Taiwan's Acer Inc., which are better at producing cheaper products.

 

Sony's annual sales slid 12.9 percent to 7.73 trillion yen. Sales fell in all key markets: down 20 percent in the U.S., 17 percent in Europe and 14 percent in Japan.

 

Its fiscal year loss was a reversal from the 369.4 billion yen profit it had a year earlier.

 

Still, the loss was smaller than the company's forecast for a 150 billion yen shortfall. The result wasn't as bad partly because TV prices held up better than expected, Sony said. A one-time gain from a change in Japanese tax laws also helped, it said.

 

Sony continued to lose money in its game segment, where its PlayStation 3 home console and PlayStation Portable have struggled against rival offerings from Nintendo Co., the Wii and DS, as well as in some markets against the Xbox 360 from Microsoft Corp.

 

Koya Tabata, analyst with Credit Suisse in Tokyo, said the forecast was in line with what he had expected. Sony must in the short run fix its electronics inventory as one step in turning its business around, he said.

 

"In the longer term, we are all waiting for the PlayStation network business to deliver profits," he said. "But that depends on management."

 

Sony sold 10.06 million PlayStation 3 machines for the fiscal year through March, up 10 percent from the previous year. It also sold more PlayStation Portable machines, at 14.11 million during the fiscal year, up slightly from 13.81 million.

 

Sony is closing three plants in Japan by the end of December -- one for cell-phone cameras, another for video recorder parts and another for systems used for smart cards. After they are shuttered, the number of plants around the world will dwindle from 57 last year to 49.

 

The company said it was on track with its previously announced plan to reduce 8,000 of its 185,000 jobs around the world, and trim another 8,000 temporary workers who aren't included in the global work force tally.

 

Sony said it was raising its cost reduction efforts from an earlier 250 billion yen by March 2010 to 300 billion yen.

 

It said it had an operating loss in its core electronics segment because of the slowing global economy, price competition and a strong yen, which erased any benefits from better liquid-crystal display TVs.

 

In its movies division, home entertainment sales declined. They were not offset by some of its stronger motion picture releases, including "Hancock."

 

In its music business, Beyonce's "I Am Sasha Fierce" and AC/DC's "Black Ice" were among albums that did well during the fiscal year just ended.

 

Sony stock dropped 6.8 percent to 2,400 yen in Tokyo. Earnings were announced after trading ended.

[Shawn]

Ha ha, looks good on them. The Peice Of Shit 3 wasn't the be all end all of gaming and now it's showing in spades.

[godslabrat]

Ha ha, looks good on them. The Peice Of Shit 3 wasn't the be all end all of gaming and now it's showing in spades.

 

Sony intentionally took a dive this generation. I have to wonder what they’re going to do to get the spotlight back when it comes time to release the PS4. Aren’t we due to start hearing early over-hyped rumors about its capabilities?

[Rybags]

Sorry for the people layed off, not for the company.

 

I wouldn't buy anything from them anymore as a matter of principal.

 

PS1 that cost me $250 died barely a year old. Sony Amplifier that I paid $600 for lasted about 5 years.

[chrisbid]

Ha ha, looks good on them. The Peice Of Shit 3 wasn't the be all end all of gaming and now it's showing in spades.

 

Sony intentionally took a dive this generation. I have to wonder what they’re going to do to get the spotlight back when it comes time to release the PS4. Aren’t we due to start hearing early over-hyped rumors about its capabilities?

 

when a company has losses in the billions, a new console is no longer guaranteed

[Lord Helmet]

Ha ha, looks good on them. The Peice Of Shit 3 wasn't the be all end all of gaming and now it's showing in spades.

 

Sony intentionally took a dive this generation. I have to wonder what they're going to do to get the spotlight back when it comes time to release the PS4. Aren't we due to start hearing early over-hyped rumors about its capabilities?

 

when a company has losses in the billions, a new console is no longer guaranteed

 

 

Nor is it the fault of a single product (be it the PS3 or something else). The company has serious issues right now, and the PS3 is just a single part of the problem.

[DracIsBack]

Sony intentionally took a dive this generation.

 

You don't seriously believe that do you?

 

Anyone that went into their executives with a business plan that said, "we deliberately want to lose marketshare to Nintendo and Microsoft and subsequently give up the lead we've had for two generations. If we are successful, we will come in last place in terms of number of units sold" would probably have been shown the door.

Edited May 14, 2009 by DracIsBack

[mcjakeqcool]

I am not at all suprized the ps3 is a faliure, psp is undersuported by 3rd party devolpers, and the ps2 should'ent even exzist. As far as I'm conserned Sony is the next Atari.

[DracIsBack]

As far as I'm conserned Sony is the next Atari.

 

The PS3 has probably sold 100 units to every one Jaguar sold.

 

Under-performing to expectactions is probably more accurate than out-and-out failure.

 

It's like all the revisionist "GameCube was a bomb" quotes I see. A console with 22 million units sold that generated billions in profits wouldn't be what I'd call a bomb or failure either.

[Ninjabba]

Sony should just cut their product line to the few things they are good at.. like game consoles (yes, I think they do a great job at this). Just ditch the cameras and mobile things.. nobody's waiting for that stuff anyway.

[godslabrat]

Sony intentionally took a dive this generation.

 

You don't seriously believe that do you?

 

Anyone that went into their executives with a business plan that said, "we deliberately want to lose marketshare to Nintendo and Microsoft and subsequently give up the lead we've had for two generations. If we are successful, we will come in last place in terms of number of units sold" would probably have been shown the door.

 

Drac, I see no other logical option: Sony chose to use the PS3 as a Trojan Horse in the HD wars. The PS3 faltered because it came out later than the 360 and was priced sky-high because of the BluRay drive. If Sony had used DVD, their console could have been out sooner and been competitivelty priced, but it wouldn't have given them a leg up to push BluRay.

 

Given that, I see only two possibilities: Either Sony willingly gave up their gaming marketshare to acheive long-term profitability in the home video market, or their marketing people really didn't understand the concept of "We can sell more of something if we price it cheaper". I don't think the latter option makes a lot of sense, so I conclude they took a dive... albeit one that will be profitable for the next 20 years in other markets.

[Shawn]

Sony intentionally took a dive this generation.

 

 

I'm sorry but thats the biggest crock of shit I've ever heard.

[Osbo]

I am not at all suprized the ps3 is a faliure, psp is undersuported by 3rd party devolpers, and the ps2 should'ent even exzist. As far as I'm conserned Sony is the next Atari.

 

Shall I remind you that the PS2 was one of the best selling systems ever? I still have mine, hooked up to an early 90's sony TV working perfectly! Sadly, I never had any interest in the PS3.

[Atarifever]

Sony's big problem is being a company designed to be in first, yet ending up third or worse in every market lately. They are losing to Nintendo and Microsoft in videogames. They are losing to Apple, Research in Motion, and Nokia in mobile phones. They are losing to Samsung (and I think Sharp) in TV. They are losing to pretty much anyone with a product line in mobile music (especially Apple). They have consistently squeezed themselves out of every market by sticking to old, out of date business models.

 

Their hugely successful Walkman couldn't get a good replacement because they couldn't see past physical music media. Their TV devision was unable to adapt to other companies managing to bring costs of production down low enough to outprice them. Their console effort was just to upgrade everything that worked in 2000, despite the market having well and truely moved on on every front except the one they risked it all on (High Def movies). They are too big and too slow to out compete their more focused, more trendy, or more forward thinking competition.

 

When Microsoft manages to out-innovate you in TWO markets, you're not a very trendy tech company anymore.

[godslabrat]

Sony intentionally took a dive this generation.

 

I'm sorry but thats the biggest crock of shit I've ever heard.

 

As I explained in a prior post, given the facts of the matter, one has to conclude that either A) Sony used its leverage in the game industry to grab a chunk of the home video industry or B) Sony couldn't understand that a console that cost $600 would sell fewer units than a console that cost $400.

 

Option A sounds a hell of a lot more logical to me.

[chrisbid]

sony needs to sell or spin off the playstation brand. like godslabrat said, convergence killed the ps3 (as well as the psp). an independent or second party playstation brand can put the focus back on video games.

 

what is scary is how badly sony is floundering despite a virtually 100% failure rate of the Xbox 360.

[Lord Helmet]

what is scary is how badly sony is floundering despite a virtually 100% failure rate of the Xbox 360.

 

That's an interesting point. I've gotta think it has to do with MS paying out the ass for exclusive content, and the fact that they had plenty of lead time in the market with the 360 console itself.

[moycon]

That's an interesting point. I've gotta think it has to do with MS paying out the ass for exclusive content, and the fact that they had plenty of lead time in the market with the 360 console itself.

 

Plus they fix their sh*t quickly. Still, can you imagine where they would be sitting if they hadn't released such an un-reliable piece of crap. You can bet many many thousands of people didn't and wouldn't buy a 360 because of the issues.

 

My understanding is Sony has been losing on all fronts. The PS3 is only the tip of the ice burg. Didn't I read the sales of Sony HDTVs was dismal? Also the Sony movies aren't selling like the need to be. Sony took a gamble betting that Blu Ray would be the next standard in physical disk media, thing is many many many people don't care if Nacho Libre is in 1080p, and pushing a button and watching a movie via download is even easier than spending a few minutes getting off your fat ass, searching for, and putting a disk in to watch. I think they are trying to find something that people will latch onto so they can make a bunch of $$$ but they failed miserably in every attempt. Whoever calls the shots around that company needs to be put out to pasture.

[godslabrat]

My understanding is Sony has been losing on all fronts. The PS3 is only the tip of the ice burg. Didn't I read the sales of Sony HDTVs was dismal? Also the Sony movies aren't selling like the need to be. Sony took a gamble betting that Blu Ray would be the next standard in physical disk media, thing is many many many people don't care if Nacho Libre is in 1080p, and pushing a button and watching a movie via download is even easier than spending a few minutes getting off your fat ass, searching for, and putting a disk in to watch. I think they are trying to find something that people will latch onto so they can make a bunch of $$$ but they failed miserably in every attempt. Whoever calls the shots around that company needs to be put out to pasture.

 

"Still, the loss was smaller than the company's forecast for a 150 billion yen shortfall. The result wasn't as bad partly because TV prices held up better than expected, Sony said."

 

Trying to be fair: while the above isn't a resounding bit of good news for Sony, it seems their TVs are one of their stronger divisions... and BluRay is growing at a rate very comparable to DVD circa 1999. Sony does have its strengths at the moment, and they did make a few good calls. However, it's pretty clear the gamers are getting shafted under the current regime. I agree with everyone else here who says they need to refocus and get out of the "We make everything!" mentality.

[DracIsBack]

Drac, I see no other logical option:

 

Sorry, but I still think that's ridiculous.

 

Sony chose to use the PS3 as a Trojan Horse in the HD wars. The PS3 faltered because it came out later than the 360 and was priced sky-high because of the BluRay drive. If Sony had used DVD, their console could have been out sooner and been competitivelty priced, but it wouldn't have given them a leg up to push BluRay.

 

Here's another thought. They had the number one console in the last generation, even though they came out later than the Dreamcast (which launched with a strong library) and one of the big reasons why that console succeeded was because it was one of the first affordable "mass market" DVD players in addition to a console. This smacked of "let's repeat what we did with the PS2". Only this time, it didn't work as well. I find it difficult to believe that anyone in Sony would ever suggest that they deliberately gave up marketshare. More likely - they thought they were going to obliterate the competition, as they had done with PS2 vs. Dreamcast, XBox and GameCube ... and that Blu-Ray would help, just as DVD helped PS2.

[DracIsBack]

what is scary is how badly sony is floundering despite a virtually 100% failure rate of the Xbox 360.

 

While XBox 360 quality issues are well known, "virtually 100% failure rate" gets my pick for biggest exaggeration of the day.

[Video]

Wow, only started loosing money this year? I mean, comeon. The PS3 (as a gameing console) has pretty much failed. Everybody I know of that has one cause it was only "slightly" more expensive than a standalone BR player. For the past two years, I've seen PS3 and PSP both dry up around here. Seriously, right now, PSP has one shelf, not one section, one shelf, and PS3 has about half a section (and it started with two)

 

Of course, I don't guess that's a reflection of Sony over all, but those are two of their bigger items at the moment.

 

what is scary is how badly sony is floundering despite a virtually 100% failure rate of the Xbox 360.

 

While XBox 360 quality issues are well known, "virtually 100% failure rate" gets my pick for biggest exaggeration of the day.

 

As I said in the X-box forum, the thing is that dissatisfied people simply bitch more. There's not as much as it looks like, but what is there is magnified by the people who continually complain about it. Most of my friends have 360's, and none of them have had the system die on them.

[godslabrat]

Drac, I see no other logical option:

 

Sorry, but I still think that's ridiculous.

 

Sony chose to use the PS3 as a Trojan Horse in the HD wars. The PS3 faltered because it came out later than the 360 and was priced sky-high because of the BluRay drive. If Sony had used DVD, their console could have been out sooner and been competitivelty priced, but it wouldn't have given them a leg up to push BluRay.

 

Here's another thought. They had the number one console in the last generation, even though they came out later than the Dreamcast (which launched with a strong library) and one of the big reasons why that console succeeded was because it was one of the first affordable "mass market" DVD players in addition to a console. This smacked of "let's repeat what we did with the PS2". Only this time, it didn't work as well. I find it difficult to believe that anyone in Sony would ever suggest that they deliberately gave up marketshare. More likely - they thought they were going to obliterate the competition, as they had done with PS2 vs. Dreamcast, XBox and GameCube ... and that Blu-Ray would help, just as DVD helped PS2.

 

So, then you're going with Option B, that Sony seriously thought they'd sell as many consoles at $600 as they would at $400. That's basically what you're saying here.

Edited May 15, 2009 by godslabrat

[moycon]

Trying to be fair: while the above isn't a resounding bit of good news for Sony, it seems their TVs are one of their stronger divisions...

 

Well that's good to know. I could have sworn after the holidays there were reports the HDTVs weren't moving like they wanted them to, obviously I read it wrong. Sounds like thats one thing helping them out.

Statements like this...

 

In its movies division, home entertainment sales declined. They were not offset by some of its stronger motion picture releases, including "Hancock."

 

...make me think Blu Ray isn't helping out so much.

[+swlovinist]

Sony did not intentionally dive on this generation, they just gambled wrong. Just like many other flops in video game history, they just bet on the wrong product for the market. They are taking a beating, but can still bounce back if they do it quickly. If they offered a redesign of the PS3(buzz of something of a leaked footage already), and offered it at a reasonable price($100 less), they can still be competitive and still have a chance of bouncing back(just maybe). The truth of the matter is that they just really screwed up with their third console after completely dominating the last 10 years in game sales. I for one think that they can bounce back, and for the record, the PS2 is a shining example of how to market and support a game system. You have to love a game system in which you can go to a game store and buy non crappy non sport titles for the system for $5 and under.