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Sony Loses a Record $6.4 Billion for the Fiscal Year Ending March 2012

by William D'Angelo, posted on 10 April 2012 / 6,733 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.


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12 Comments

Joel12345
Joel12345 (on 10 April 2012)

...ouch Sony's future doesn't look bright :(

  • +7
duckypwns
duckypwns (on 11 April 2012)

Is that a bad thing?

  • 0
selnor
selnor (on 12 April 2012)

Trouble is I don't think Sony believe what they say about profit. Sony has not been the best TV manufacturer since the start of the millennium ( Panasonic, Pioneer and Samsung all continue to win more awards. And Sony hasn't had the ultimate best TV award for so so long. Mix that with Alpine, Panasonic and Rockford And Fosgate all beating them at car stereos and sound systems at home Arcam, Cambridge Audio and Marantz all better quality names. Sony are not considered top for electronics in any field I currently buy in.

  • +2
Dark_Lord_2008
Dark_Lord_2008 (on 11 April 2012)

Restructure and 10,000 job losses in reaction to the $6.4 billion loss.

  • +2
Araknie
Araknie (on 11 April 2012)

Mmmm, i hope they lose less. But i think really they have hard times recently. Every possibile strategy has gone wrong in the past 3-4 years, plus they had a real big situation in Japan, and they were banged by that. I hope they can do something.

  • +2
Chark
Chark (on 10 April 2012)

It's been rough for Sony recently, the earthquake and the flooding. Analysts have still pointed out that Sony is in a good position to gain a foothold across markets with product compatibility faster than most competitors. New management and moves like only introducing 7 tv models at CES show strong attempts to improve their divisions and not stretch out their products too thin. If Kaz applies his playstation approach, Sony will be a nice company to work with. For example, playstation has become rapidly developer friendly and consumer oriented after the whole PS3 launch issues and wake ups like the PSN hack.

  • +2
ryuzaki57
ryuzaki57 (on 10 April 2012)

Ouch! That certainly hurts... How did the entertainment division perform?

  • +2
Jexy
Jexy (on 11 April 2012)

Lost 85% of it's value in just 10 years before this news. I'm sure it will be even more now

  • +1
sully1311
sully1311 (on 10 April 2012)

This isn't official, this is just what Sony forecast. Results don't come out until May!

  • +1
thetonestarr
thetonestarr (on 11 April 2012)

"downsizing its biggest divisions that are generating a loss" isn't gaming one of those?

  • 0
Trentonater
Trentonater (on 11 April 2012)

No because the gaming division has been profitable. Not to mention it isn't exactly one of the biggest divisions.

  • -3
gigaSheik
gigaSheik (on 10 April 2012)

Does it mean Sony will join Nintendo as a third party company? LOL

  • 0
duckypwns
duckypwns (on 10 April 2012)

I'm hoping Nintendo will define consoles once again as they did in the 90's, and that PC gaming will become more prominent and define games that require higher level graphical capabilities. Some games such as the Sly series would work well on a system that doesn't require high level capabilities. I don't know about you, but I'd rather see games like God of War on the PC, at 1080p / 60 FPS, with mods, with any controller, etc.

When I say this I always get criticized for liking Nintendo, but honestly, at least they know what a console actually is in relevance to PC gaming, and they price them accordingly. The idea should be that you pay more in order to have something better. Nintendo is offering an inferior - but VALID product. Sony and Microsoft are charging more, and offering nothing but a toned down and restricted PC gaming experience.

I just like the system of paying for what you get. That seems logical to me.

  • +2
kumagawa
kumagawa (on 10 April 2012)

Dates are wrong it's loss for fiscal year ending March 31, 2012 and forecast return to profit for fiscal year ending March 31, 2013

  • 0
EpicLight
EpicLight (on 10 April 2012)

I'm not suprised with the amount of money that Sony spent in Vita advertisements -_-

  • 0
EpicLight
EpicLight (on 10 April 2012)

Considering the amount*

  • 0