May 23, 2011
Sony Reverses Projection For Profitable Year
Sony Corp. is reversing a previous projection of having a profitable year, now saying it expects a $3.2 billion annual loss.
The company has changed its earlier projection of making $860 million in profit after the wake of Japan's tsunami and a hacker attack on its online gaming service.Sony has been hampered by production disruptions set off by the March 11 earthquake and tsunami that killed over 25,000 people, destroyed factories and sent the nation's economic recovery into reverse.
"Sony sharply revised down its net forecast to a big loss to show that the impact of the earthquake has been largely factored-in during the previous financial year, while the impact would be limited for the current year," Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management, told Reuters.
"Probably the company is expecting the global economy to recover during the second half of the year. Maybe this perception could be a bit optimistic, but we still have to wait and see."
Sony kept its operating profit forecast unchanged at $2.46 billion. It also expects slightly less in sales than it previously reported, which was a $300 million difference.
Masaru Kato, Sony's chief financial officer, said parts shortages in the aftermath of the disaster have eased but a full recovery has not been realized.
"In the first quarter, we saw quite a major impact on our manufacturing activities," he said in a statement.
After the quake, "negative factors have grown bigger" and offset earlier improvement in the previously loss-making games division, dashing hopes for a profit, he said.
Sony has also faced challenges after a security breach affected its 100 million users of its online gaming networks.
Sony has begun restoring its PlayStation Network services in the U.S. and Europe after shutting down the online gaming service last month.
The company spent $170 million to cover costs that included identity theft insurance for customers, improvements to network security, free access to content, customer support and an investigation into the hacking.
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