Sony Reports Staggering Loss
Sony Corp (NYSE:SNE) posted a $2.1 billion loss for the October-December quarter in the wake of a strong yen, a weak economy and flooding in Thailand that played havoc with its manufacturing supply chain. The troubled Japanese electronics major also announced dismal prospects for the year to end in March, expecting a loss of $2.9 billion. This is more than double what was expected by the market and would be the fourth straight year of losses for Sony.
Incoming CEO Kazuo Hirai appears to have his work cut out for him, given the dismal scenario of falling sales (down 17 percent in the December quarter), loss of market share in the TV business and a lack of innovative capability compared to its rivals such as Apple and Samsung, who have grabbed crucial markets such as smartphones and tablet computers.
Aware of this, Hirai said at a news conference, “I have a very strong sense of crisis about the environment surrounding us. We cannot be afraid to make painful choices for the future of Sony. Our rivals and the operating environment won’t wait for us.”
Though Hirai is positively viewed by analysts given his long stint with Sony, analyst Kim Young-Chan of Shinhan Investment Corp. in Seoul is pessimistic, “It won’t be easy for Sony to regain its lost ground under new leadership, as its overall competitiveness has sharply weakened. It’s got structural problems that will take years to fix. It’s not just Sony, but Japanese IT firms have similar problems. They are failing to innovate and produce industry-leading products in almost every major area – from TVs to displays, tablets and smartphones.”
Here’s how Sony shares are trading on the news:
Sony Corporation (NYSE:SNE): SNE shares recently traded at $18.19, up $1.19, or 7%.
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