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Sony trims annual net loss forecast on sales boost of image sensors, PS4s

More layoffs announced for mobile division, seen by Sony leadership as a key to the company's turnaround efforts.

Sony plans to cut 2,100 positions from its mobile division in the next year. CNET

Sony expects its net loss for 2014 to be smaller than previously forecast, thanks largely to higher-than-expected sales of image sensors and PlayStation 4 game consoles.

The technology and entertainment conglomerate will likely record a net loss of 170 billion yen ($1.4 billion) for 2014, according to preliminary results released Wednesday. The revision is a 26 percent reduction from the net loss of 230 billion yen it predicted last year.

The company also predicted its third-quarter operating profit doubled year-over-year to 178.3 billion yen ($1.51 billion), while revenue is expected to have risen by 6 percent to 2.56 trillion yen for the three months ended December 31. The results represent the first official glimpse into the financial health of the company after a security breach forced Sony to shut down its computer network for several weeks and delay its quarterly results.

Pressure is mounting on Sony's Mobile Communications business, which produces the company's smartphones, tablets and other mobile products. The division will lay off an additional 1,100 employees by March 2016 as it attempts to make the struggling business profitable. Coupled with the previously announced cut of 1,000 jobs, the 2,100 layoffs will trim the mobile division to 5,000 employees, a 28 percent reduction to a unit called by Sony CEO Kazuo Hirai as key to his attempts to revive the ailing conglomerate.

Third-quarter revenue from Sony's Game and Network Services business is expected to have increased by nearly 17 percent year-over-year to 531.5 billion yen ($4.4 billion), primarily due to PS4 sales during the holiday sales period. Sales of image sensors are credited with helping deliver 292.9 billion yen ($2.42 billion) in third-quarter revenue, a 38.6 percent increase.

Sony was scheduled to release its final third-quarter earnings results on Wednesday, but in late January it filed a request with the Financial Services Agency of Japan for an extension of its filing deadline from February 16 to March 31. The request indicated that the company was still working on key computer applications after "a serious disruption of [Sony Pictures'] network systems occurred, including the destruction of network hardware and the compromise of a large amount of data on these systems."

A group calling itself #GOP, aka "Guardians of Peace," claimed responsibility and said it had obtained internal information. The security breach turned out to be more serious and pervasive than initially believed. Hackers leaked the personal information -- including Social Security numbers -- of more than 47,000 celebrities, freelancers, and current and former Sony employees. They also leaked yet-to-be released movies, as well as emails between Sony Pictures executives, among other internal documents.

Despite the attention focused on Sony following the hack, Sony doesn't expect the security breach to impact its earnings. Some reports have pinned Sony's cost to overcome the hack as high as $100 million, but Sony Pictures CEO Michael Lynton said in January that "it's actually far less than anything anybody is imagining." He also noted that insurance will cover all costs associated with the hack.

Sony said it had allocated $15 million for "investigation and remediation costs" related to the breach.