Sony hit by loss from quake, lowers forecast
The electronics giant reports a quarterly net loss due largely to the Japanese quake and tsunami but also due to a decline in TV sales, prompting it to lower its full-year forecast.
Sony took a loss in its fiscal first quarter due largely to the Japanese quake and to lower TV sales, forcing the company to lower its annual forecast.
For the quarter that ended June 30, the electronics giant reported today a net loss of 15.5 billion yen ($199 million), compared with a net profit of 25.7 billion yen a year ago. Revenue dropped 10 percent to 1.49 trillion yen from 1.66 trillion yen in the prior year's quarter.
The weak quarter prompted Sony to lower its forecast for the full year. For the fiscal year ending March 31, 2012, the company is now eyeing net income of 60 billion yen, a 25 percent drop from its May estimate of 80 billion yen. Sales are now expected to reach 7.2 trillion yen, down 4 percent from the earlier forecast of 7.5 trillion yen.
Income and sales were both hurt by the impact of the March earthquake and tsunami, which constrained the supply chain and lowered production due to damage to manufacturing equipment. However, the affected business operations are recovering faster than Sony originally anticipated in May.
The company also witnessed in a drop in its electronics business, seen most dramatically in lower TV sales. Revenue from LCD TVs fell as Sony was forced to lower prices due to weaker market conditions in the U.S. and Europe. However, LCD TV sales rose in Japan thanks to the country's transition from analog to digital television.
Sales dropped across most of Sony's business segments, notably consumer products and services (which includes TVs, home audio and video, and gaming products) and professional device and solutions (which includes semiconductors and related components). On a positive note, Sony Pictures racked up a sales gain of 9.3 percent, while financial services contributed a 19.3 percent boost in revenue.
Finally, unfavorable exchange rates between the yen and the euro also took a bite out of the first quarter.
Despite the less-than-glowing quarter and its decision to lower the annual forecast, Sony is anticipating more favorable results ahead.
"The impact from the quake was substantial in the first quarter, but the supply chain has bounced back rapidly, so from the second quarter onward we expect things to brighten considerably," Sony Chief Financial Officer Masaru Kato said in a statement, reported by The Wall Street Journal.
