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Sony Still A CE 'Basket Case' As Losses Rack Up

By David Richards | Friday | 01/11/2013

Sony who was caught out this year by the Australian Tax Office resulting in them being hit $21M in penalties and $32M in back taxes has cut their global profit forecast by 40% after revealing that several divisions including their TV, gaming PC and digital camera divisions are struggling to compete.

Sony cut its profit forecast for the fiscal year by $200 million, they were also forced to cut their sales forecasts for four of its electronics products: TVs, personal computers, digital cameras and video cameras divisions that are core to their Australian operation.

The Wall Street Journal said that the poor numbers were a black eye for Kazuo Hirai, who became chief executive last year and vowed to push Sony out of a prolonged slump that began when its vaunted television-set business began to falter ten years ago.

Five of Sony's eight business segments recorded losses in the latest quarter. The only divisions that managed to report a profit were music, financial services and devices, which includes image sensors for smartphone cameras.

Sony's TV-set business, which posted a first-quarter profit, recorded an operating loss of ?9.3 billion in the latest quarter.

Also suffering was Sony's movie business with big flops for "White House Down" and "After Earth."

With a quarterly net loss of $197 million, Sony's bad-news came in stark contrast to an upbeat performance by Panasonic It also stirred doubts about how the best-known Japanese technology company can anchor a turnaround as rivals like Apple and Samsung have gained dominance through heavy investment in new mobile devices.

"I still cannot see any fundamental and believable strategy for the rebirth of Sony's electronics business," said Makoto Kikuchi, CEO of Myojo Asset Management based in Tokyo.

Stating the obvious Senior Vice President Shiro Kambe said "In order for Sony to grow significantly over the medium term, we need revival in our core electronics business".

Sony also reported that their gaming division posted a loss of $8 million, compared to a profit of $23 million this time last year. The losses were made despite an overall sales rise of 5.1 percent year-over-year to $1.6 billion.

Sony said the decrease in sales, was due to an overall decrease in unit sales of PlayStation 2, PlayStation 3, and PSP. Sales were partially offset by increased PS3 software sales, compared to the same quarter last year, Sony said.

Sony sold 2 PS3 units during the quarter, down from 3.5 million this time last year, though that figure also included PS2 sales. PSP and PS Vita sales combined for 800,000 units during the period, a 50 percent decline from the 1.6 million sold last year.

As for software, Sony sold 93 million games during the quarter, up from 60 million this time last year. Sales were not broken down by platform.

Sony has high hopes for the Nov. 15 release of the PlayStation 4, the company's first reboot of its popular videogame console in seven years. Sony plans to sell five million PS4 units by the end of March.

 But it is unclear how much console sales can boost earnings as consumers migrate away from dedicated game devices in favour of mobile applications.

Sony's TV business, recorded an operating loss of ?9.3 billion in the latest quarter. The operation has posted annual losses for nearly a decade. 
The one division that showed potential was the Sony smartphone operation with operating loss from their smartphone and PC division narrowing to ?900 million from ?23.1 billion. Revenue jumped 39% because of brisk handset sales.

However analysts a sceptical as to whether Sony has the capability to compete up against a surging Apple and Samsung.

Over the past year, Sony has poured resources into smartphones to turn the business into an engine for growth. In February, Sony introduced its flagship Xperia Z smartphone, which borrowed technological resources from the company's camera and TV businesses. A successor model was released in September.

Though Sony's smartphone sales are brisk in Japan and Europe, the company has little presence in the U.S. and China, the world's two biggest smartphone markets.

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