Sony has just reported its first annual loss in 14 years, having lost 98.9 billion yen (?685m; $1 billion) in the fiscal year that ended in March. It now says it will close three Japanese factories — “one for cell-phone cameras, another for video recorder parts and another for systems used for smart cards” — which means it will close eight factories worldwide by March 2010, reports AP. The story says:
Sony also continued to lose money in its game segment, where its PlayStation 3 home console and PlayStation Portable have struggled against rival offerings from Nintendo Co., the Wii and DS, as well as in some markets against the Xbox 360 from Microsoft Corp.
The company sold 10.06 million PlayStation 3 machines for the fiscal year through March, up 10% from the previous year. It also sold more PlayStation Portable machines, at 14.11 million during the fiscal year, up slightly from 13.81 million.
The company expects to lose another $1.2bn in this financial year, ending March 2010.
The Guardian’s Justin McCurry, reporting from Tokyo, points out:
The losses mark a dramatic turnaround from last year when Sony, which is in the midst of a tough cost-cutting and restructuring regime under its Welsh-born chief executive Sir Howard Stringer, reported a ?369.4bn profit. It said its forecast reflected expectations that the “deterioration in the business environment brought on by the slowing global economy will continue”, adding that the cost of restructuring would add to the losses.
The results are not too surprising. Sony was already having a tough time with the PS3 failing to repeat the massive success of the original PlayStation and the PS2, the decline of the CD-based music business, and increasing competition in the consumer electronics markets from Asian companies outside Japan. Sony, like many other companies, was then hit by the global financial meltdown.
And the big question remains: What can Sir Howard do to turn things around?
Cutbacks can reduce losses but it’s hard to see how Sony can turn round its games business (where the PS3 simply costs too much to make) or find new areas to develop.