Sony Corp more than doubled its annual loss forecast to ¥220 billion (US$2.9 billion), underscoring the challenge for incoming chief executive officer Kazuo Hirai in reviving Japan’s biggest consumer-electronics exporter.
The company blamed a stronger yen, cuts in production caused by last year’s Thailand floods and the cost of exiting a display-panel venture with Samsung Electronics Co for raising its November forecast for losing ¥90 billion. The loss in the 12 months ending next month will be the fourth in a row, a first since the Tokyo-based company was listed in 1958.
Sony, which yesterday named Hirai to replace Howard Stringer starting on April 1, cut sales targets for cameras, personal computers and PlayStation 3 game consoles, and said its mobile-phone unit performed worse than expected. The company posted a third-quarter net loss of ¥159 billion, compared with the ¥43 billion average loss of four analysts’ estimates compiled by Bloomberg.
“Sony is a very weak company,” said Edwin Merner, president of Atlantis Investment Research in Tokyo, who manages US$300 million and does not hold Sony shares. “To turn around at this time will be very, very difficult. As they go downhill, they pick up speed.”
It maintained its target for selling 20 million televisions, though the business may lose between ¥220 billion and ¥230 billion, including the cost of exiting the venture with Samsung, chief financial officer Masaru Kato said yesterday. That -compares with a November forecast for a ¥175 billion loss and adds to the ¥480 billion in losses since 2004.
Sony, maker of the Bravia model, has lost ground to Samsung and LG Electronics Inc, both of which sell TVs profitably. Sony and fellow Japanese television makers Sharp Corp and Panasonic Corp have been crippled by the strengthening yen, which forced Sharp to predict a record US$3.8 billion loss yesterday.
Sony dropped 2.6 percent to close at ¥1,328 in Tokyo trading yesterday, before the announcement. The stock has plunged 53 percent in the past 12 months, compared with an 18 percent drop for the broader TOPIX. Sony slid by more than 60 percent since Stringer, 69, took the helm in June 2005.
Hirai, 51, will succeed Stringer, who will become chairman of the board after a shareholders meeting in June, the company said in a statement on Wednesday. Hirai, who worked in the company’s music and entertainment divisions, established his reputation by turning around the PlayStation unit and edged out three other candidates with engineering backgrounds for the top job.
The company yesterday cut sales targets for the PlayStation 3 to 14 million units from 15 million. Hirai said recently the PlayStation 3 would have a 10-year lifespan, suggesting the five-year-old player will not be replaced soon.
Sony also cut its sales target for cameras to 21 million units from 23 million and reduced its forecast for personal-computer sales to 8.4 million from 9.4 million. Camcorder and Blu-ray disc sales also should be lower than projected, the company said.
The impact from Thailand’s worst floods in 70 years is estimated at ¥45 billion, while the appreciating yen will hurt profit by as much as ¥20 billion, Kato said. An appreciating yen damps the repatriated value of Sony’s overseas sales, while a weakening won inflates Samsung and LG.
Sony’s rating was cut by Moody’s Investors Service last month and Fitch Ratings in December, with both citing the difficulty of turning around the TV operations. Moody’s, which assigned a negative outlook to Sony, also downgraded Panasonic Corp’s rating.
Sony has unveiled new tablets, cameras and handheld game players to take on Apple Inc and try to revive profit. It also bought out partner Ericsson AB’s stake in their mobile-phone partnership.
In December, Sony introduced its latest handheld device, the PlayStation Vita, in Japan. Sales reached 500,000 units during the first three weeks, Hirai said last month. The product will be offered in the Americas and Europe starting on Feb. 22.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday obtained the government’s approval to inject an additional US$7.5 billion into its US subsidiary, the Department of Investment Review said in a statement. The department approved TSMC’s application of investing in TSMC Arizona Corp, which is engaged in the manufacturing, sales, testing and design of IC and other semiconductor devices, it said. The latest capital injection follows a US$5 billion investment for TSMC Arizona approved in June. The chipmaker has broken ground on two advanced fabs in Arizona with aggregated investments approved by the department totaling US$24 billion thus far. According to TSMC, the first Arizona
The lethal hack of Hezbollah’s Asian-branded pagers and walkie-talkies has sparked an intense search for the devices’ path, revealing a murky market for older technologies where buyers might have few assurances about what they are getting. While supply chains and distribution channels for higher-margin and newer products are tightly managed, that is not the case for older electronics from Asia where counterfeiting, surplus inventories and complex contract manufacturing deals can sometimes make it impossible to identify the source of a product, analysts and consultants say. The response from the companies at the center of the booby-trapped gadgets that killed 37
FRIENDLY TAKEOVER: While Qualcomm Inc’s proposal to buy some or all of Intel raises the prospect of other competitors, Broadcom Inc is staying on the sidelines Qualcomm Inc has approached Intel Corp to discuss a potential acquisition of the struggling chipmaker, people with knowledge of the matter said, raising the prospect of one of the biggest-ever merger and acquisition deals. California-based Qualcomm proposed a friendly takeover for Intel in recent days, said the sources, who asked not to be identified discussing confidential information. The proposal is for all of the chipmaker, although Qualcomm has not ruled out buying some parts of Intel and selling off others. It is uncertain whether the initial approach would lead to an agreement and any deal is likely to come under close antitrust scrutiny
SECURITY CONCERNS: The proposed ban on Chinese autonomous vehicle software and hardware would go into effect with the 2027 and 2030 model years respectively The US Department of Commerce today is expected to propose prohibiting Chinese software and hardware in connected and autonomous vehicles on US roads due to national security concerns, two sources said. US President Joe Biden’s administration has raised concerns about the collection of data by Chinese companies on US drivers and infrastructure as well as the potential foreign manipulation of vehicles connected to the Internet and navigation systems. The proposed regulation would ban the import and sale of vehicles from China with key communications or automated driving system software or hardware, said the two sources, who declined to be identified because the