Sony sees $2.1B loss for fiscal year as mobile woes take a toll

The situation is so bad that Sony is suspending its dividend -- the first time it won't be making a payout since it listed in 1958.

Aloysius Low Senior Editor

Aloysius Low is a Senior Editor at CNET covering mobile and Asia. Based in Singapore, he loves playing Dota 2 when he can spare the time and is also the owner-minion of two adorable cats.

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Roger Cheng Former Executive Editor / Head of News

Roger Cheng (he/him/his) was the executive editor in charge of CNET News, managing everything from daily breaking news to in-depth investigative packages. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade and got his start writing and laying out pages at a local paper in Southern California. He's a devoted Trojan alum and thinks sleep is the perfect -- if unattainable -- hobby for a parent.

Expertise Mobile, 5G, Big Tech, Social Media Credentials

SABEW Best in Business 2011 Award for Breaking News Coverage, Eddie Award in 2020 for 5G coverage, runner-up National Arts & Entertainment Journalism Award for culture analysis.

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Aloysius Low

Roger Cheng

Sept. 17, 2014 12:29 a.m. PT

2 min read

Sony CEO Kazuo Hirai must figure out how to make mobile profitable. CNET

Sony's envisioned comeback in the mobile business has hit a snag. A big snag.

The Japanese electronics conglomerate warned Wednesday that it will post a loss of 230 billion yen ($2.1 billion) in its fiscal year that ends March 31, 2015. It also suspended its dividend -- the first time it won't be making a payout since it listed on the Tokyo Stock Exchange in 1958.

The company blamed the "competitive environment of the mobile business." Sony has been hammered by competition and an inability to find distributors in key markets such as the US. While its line of high-end Xperia smartphones have been praised for their design and waterproof bodies, they continue to fall under the shadow of giants Apple and Samsung. Sony's problems underscore the hyper-competitive environment that smartphone makers face -- with similar struggles facing HTC and others.

Sony said the losses are a result of a writedown of 180 billion yen ($1.67 billion) in its mobile business and will result in the overall company's fifth annual loss in six years. It also marks a rough year for CEO Kazuo Hirai, who took the reins in 2012 with a vow of turning the business around.

Sony plans to change its mobile strategy by concentrating its efforts in "certain geographical areas, premium lineups and reducing the number of models in its mid-range lineup," the company said in a statement (PDF).

The company had reported a net profit of around 25.7 billion yen in the April-to-June quarter due to blockbusters such as the "Amazing Spider-Man 2" and strong sales of the PlayStation 4 console.

The Xperia Z3 has won critical praise, but may get overshadowed by its competitors. CNET

But going into the critical holiday-shopping season, there remain a lot of questions about Sony's mobile business. While its Xperia Z3 flagship is making its way into the US through T-Mobile, Sony doesn't have any other US partners for distribution. The company has resorted to selling unlocked versions of its smartphones through its retail stores and website. Beyond T-Mobile, Sony only sells its Z2 tablet through Verizon Wireless.

While Sony plans to focus on its premium lineup, there are questions about whether the company can compete in that category. Apple's iPhone 6 and iPhone 6 Plus are launching on Friday, and Samsung's Galaxy Note 4 is set to hit stores in October. Beyond Apple and Samsung, rivals such as HTC and LG are also fighting for a share of the high-end pie with their respective flagship smartphones. On top of that, companies such as Google and Microsoft are laying out plans to broaden their reach into the emerging markets with more affordable smartphones -- the fastest growing segment of the business.