Sony Loses a Record $6.4 Billion for the Fiscal Year Ending March 2012 - News/ 7,645 Views
Sony posted a record $6.4 billion annual net loss for the fiscal year ending March 31, 2012, according to Reuters. This is double what was originally forecasted and puts Sony in the red for a fourth straight year. Despite such huge losses Sony forecasts that it would return to profit for the fiscal year ending March 31, 2013, with an expected operating profit of $2.2 billion.
"There have been several reasons for our poor results," said Chief Financial Officer Masaru Kato. "We are aiming for a rebound and for this we have made management changes."
The addition loss was due to the write off of $3.7 billion of deferred tax assets, mainly in the United States. Credit normally builds up and is used against future taxable profits, however due to Sony's constant losses had to be written off.
"To bring Sony back, [Kazuo] Hirai needs to develop personnel and platforms that create competitive and innovative products, but a lot of talent left under early retirement plans," said Tetsuru Ii, president of Commons Asset Management. "The old Sony culture would only allow it to make things that were the best globally. Under that logic, does it make sense to continue its TV business, when it's not even the market leader in Japan?"
Some analysts do believe that Kazuo Hirai, Sony's new CEO, will be able to stop Sony's downward spiral by getting all of Sony's divisions working together and by downsizing its biggest divisions that are generating a loss.
"They could certainly become profitable through downsizing and shrinking some of their loss-making businesses this year, but we'll have to wait and see if they can continuously be profitable," said Yuuki Sakurai, head of fund manager Fukoku Capital. "I think Sony is fighting with its old image. People think Sony can succeed (by doing what it did in the past), when there is a limit to what they can really do (in the current competitive landscape)."
Stay tuned tomorrow for more in depth news, as Kazuo Hirai will be speaking in a briefing where he plans to outline the revival strategy of Sony.