Sony posts record loss as revenue slides and issues mount

The company says that its revenue was down 9.6 percent during the fiscal year ended March 31, and its losses slipped to $5.55 billion on the year.

Sony CEO Kazuo Hirai has some work cut out for him to reverse his company's losses.
Sony CEO Kazuo Hirai has some work cut out for him to reverse his company's losses. Stephen Shankland/CNET

Sony's troubles during the fiscal year ended March 31 were major -- and its latest financials bear that out.

The company today announced its fiscal-year earnings (PDF), revealing that its revenue slipped by 9.6 percent compared to last year, ending the period at $79.2 billion. What's worse, Sony's fiscal-year loss hit a record $5.55 billion, effectively making it the worst fiscal year in the company's storied history.

Still, Sony tried to keep a brave face on its earnings, saying that its sales declines were primarily due to unforeseen circumstances, including a strong yen, the Great East Japan Earthquake, and the floods in Thailand. The company did acknowledge, however, that some of its divisions were hit hard during the period.

One of those hard-hit segments was the company's Consumer Products & Services division. According to Sony, sales in that division, which includes LCD televisions, PCs, digital imaging, and other core products, were down 18.5 percent to $38.3 billion. What's worse, that division posted a meager operating profit during the 2011 fiscal year, but fell to a massive $2.8 billion operating loss in 2012.

For shareholders, this is by no means surprising. Sony has been posting difficult quarters for the last year, and has made drastic changes to address its troubles. Chief among those changes was the company's replacement of former CEO Howard Stringer with new chief executive Kazuo Hirai . Under Hirai's leadership, Sony has shuffled its executive team and initiated a strategy, called "One Sony," that shifts the company's focus to "three core pillars" -- digital imaging, gaming, and the mobile market.

In order to return Sony to profit, however, the realignment won't be enough. So, last month, the company announced that it plans to lay off 10,000 employees , or about 6 percent of its global workforce, to help it return to profitability.

"I thought turning around the PlayStation business was going to be the toughest challenge of my career, but I guess not," Hirai said to the Wall Street Journal about Sony before he officially took the role of CEO. "It's one issue after another. I feel like 'Holy s--, now what?'"

Despite having to make tough decisions and the chances of more coming seem high, Sony is confident that its next fiscal year will be much better. In today's earnings announcement, the company said that it expects revenue during its 2013 fiscal year to jump by 14 percent to 7.4 trillion yen ($92.9 billion). In addition, the company expects to reverse its losses and make a slight, 30 billion yen profit on the period.

 

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