Sony Confirms Dark Times Ahead, Expects US$2.1 Billion Operating Loss

In a recent announcement, Sony, one of the world's largest manufacturers of consumer electronics, said that it would post a record $2.9 billion annual operating loss, citing sliding demand and a stronger yen. With the statement, the company also provided details regarding the restructuring plans it would implement in an attempt to revive its electronics business.

 

The reported operating loss will be Sony's first in 14 years of profitability, consequently confirming troubles of a company that has now fallen behind Apple in the portable music market and Nintendo in the videogame segment. Sony is also reported to be losing money in the flat TV sector.

 

According to the maker of the PlayStation gaming console, the company expects an operating loss of 260 billion yen, or US$2.1 billion, considerably lower than early financial projections for a 200 billion yen profit, or the earlier media estimations of a 100 billion yen loss.

 

“While these are extremely challenging times, we must be fully prepared to embrace the opportunities that await us once these dark economic clouds begin to part,” Sony Chief Executive Howard Stringer said in a news conference on Thursday.

 

The company announced that it planned to continue investing in areas such as the development of auto-use batteries, which could soon see a considerable boost, as the technology for hybrid and electric vehicles continues to grow. It also intends to continue its restructuring plan, outlined in December 2008, by beefing up the program. According to the latest figures, Sony will be closing five to six of its plants and cut a total of 16,000 jobs, in an attempt to save 100 billion yen a year, in costs.

 

“We simply have no alternative but to dramatically change the fundamental ways we view our business as well as the way we create, manufacture and distribute our products,” Stringer said.

 

News of Sony posting its first loss in 14 years emerged earlier this month, after the company first announced its restructuring plans, one month ago. Back then, business daily Nikkei estimated that Sony would post an operating loss of 100 billion yen, or roughly US$1.1 billion.