Sony forecasts first annual net loss in 14 years
TOKYO (AP) – Sony Chief Executive Howard Stringer acknowledged Thursday he had not gone far enough with cost cuts and efforts to combine entertainment with electronics as his company projected its first annual loss in 14 years.
"More has to be done and more can get done," Stringer said at a hastily called news conference at Sony's Tokyo headquarters. "We have a long way to go."
Sony Corp. said it will offer early retirement to employees at its prized TV division, seeking to trim personnel costs there by 30 percent. It is also slashing jobs at its movies, music and game businesses. Sony did not give a head count target for the reductions. It said it is cutting 1,000 temporary workers when it closes one of two TV plants in Japan.
Stringer said he and two other top executives, including President Ryoji Chubachi, will give up their entire bonus, which would halve their annual pay, according to Sony. Other executives and managers will see lower pay.
But Koya Tabata, electronics analyst at Credit Suisse in Tokyo, was skeptical about Sony's prospects.
"There was no change to his strategy. What he said was more of the same," he said of Stringer's remarks. "And that's bad."
Last month, Sony had already said it would cut 8,000 of its 185,000 jobs around the world and shutter five or six plants – about 10 percent of its 57 factories. It would also trim 8,000 temporary workers who aren't included in the global work force tally.
Stringer said Sony needs carry out management decisions from the top more quickly to fix its problems.
"There is still a lot of the old Sony, and not enough of the new Sony," he said.
Battered by slumping sales and a strong yen, Sony expects to sink into a 150 billion yen ($1.7 billion) net loss for the fiscal year through March, a reversal from 369.4 billion yen profit the previous year.
"The massive economic upheaval being experienced across the globe is sparing no one in the consumer electronics world," Stringer said, adding that details of the additional steps will be announced in April or May.
The last - and only - time Sony reported a loss, for the fiscal year ending March 1995, the red ink came from one-time losses in its movie division, marred by box office flops and lax cost controls.
Sony joins some of Japan Inc.'s biggest names in painting bleak outlooks. Toyota Motor Corp. is forecasting its first operating loss in 70 years – although it says it will eke out a small net profit.
Sony, which makes the Walkman player and PlayStation 3 game machine, also lowered its sales forecast for the fiscal year through March to 7.7 trillion yen, down 13 percent from the previous year.
Welsh-born American Stringer, who in 2005 became the first foreigner to head Sony, has repeatedly promised to get Sony's sprawling businesses to work together to deliver on innovative products that exploit Sony's rich movie, game, music and other entertainment content to sell hardware products.
Sony made important errors in recent years, falling behind in flat-panel TVs and portable music players.\
Company officials said a reason it was continuously in the red in its TV unit was that it was difficult to adjust the purchasing of panels amid volatile price changes. Sony no longer makes liquid-crystal display panels on its own, and has a joint venture with Samsung to procure panels.
The efforts announced Thursday are expected to save Sony 250 billion yen for the fiscal year ending March 31, 2010.
Other measures include outsourcing software development in India, signing deals for making cheaper products in emerging markets, and reducing advertising expenses.
Sony has taken a beating from the global slump that crimped consumer spending during the critical year-end shopping season. It is particularly vulnerable to the strong yen since about 80 percent of its sales come from overseas. The dollar has dropped to below 90 yen recently from as high as 117 yen last year, eroding with it Sony's foreign income.
In October, it lowered its forecast to a 150 billion yen ($1.7 billion) profit. But conditions worsened since then, as profitability worsened not only at its core electronics unit but also at its video game, movie and financial businesses, it said.
"We must move ahead with reforms, but my mission is to also nurture innovation," Chubachi said. "We will become a strong Sony."
The company's stock fell 51 yen, or 2.6 percent, to 1,938 yen. The earnings revision was announced after the market closed.
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