Sony has announced this morning that it has forecast a record $6.4 billion loss for the 2011 business year that ended on March 31 in Japan. That figure has been inflated by a tax charge of around $3.6 billion that was issued to the company in the United States, and added to its expected $2.9 billion loss from operations.
It’s more than double the ¥220 billion (approx. $2.7 billion) loss that Sony predicted just two months ago, and it’s being blamed on a weak demand for the company’s televisions, and more innovative and appealing products from companies like Apple and Samsung.
But the Japanese company is expecting things to get better. It has already announced that it will shed 10,000 employees (around 6% of its workforce) in an effort to save cash, and it’s predicting that it will see an operating profit of ¥180 billion (approx. $2.2 billion) this year. Kazuo Hirai, who became Sony’s CEO just this month, said he is prepared to take “painful steps” to ensure the company’s revival.
Tetsuru Ii, president of Commons Asset Management, believes those steps should include creating more innovative products:
“To bring Sony back, Hirai needs to develop personnel and platforms that create competitive and innovative products, but that will be a formative task after a lot of talent left under early retirement plans.
“The old Sony culture would only allow it to make things that were the best globally. Under that logic, does it make sense for Sony to continue its TV business, when it’s not even the market leader in Japan?
“In terms of management philosophy, (Hirai) will have to choose and focus the company’s business activities.”
Hirai, who has been pivotal to Sony’s success with the PlayStation, has dismissed suggestions that it should pull out of the TV market and states that the company’s Bravia line will be crucial to his “convergence” strategy.
Sony will announce its annual results on May 21.
Do you think Hirai can get Sony out of the red?