Sony reports Q1 loss, cuts full-year outlook
Sony's business was hit by unfavorable exchange rates, competition, and a hacking attack
Sony reported a net loss for the three month period from April to June as the company dealt with unfavorable exchange rates, cut-throat competition in the consumer electronics business, and a hacking attack on its online gaming network.
The consumer electronics giant posted a net loss of ¥15.5 billion (US$191 million) for the quarter against a profit of ¥25.7 billion in the same period of 2010. Sales and operating revenue dropped 10 percent to just under ¥1.5 trillion.
Sales in Sony's two primary business units slumped and the company downgraded its outlook for the year to March 2012.
The consumer products and services division, which includes Sony's Bravia LCD TV and Vaio laptop computer operations, registered an 18 percent drop in sales compared to the same period in 2010, while the professional devices division, which includes Sony's components business, saw sales fall 16.5 percent.
Sony blamed tough competition in the LCD television market for pushing down prices and squeezing profits, and said sales of video cameras also fell due to the market shrinking.
Component sales also fell due to disruptions in manufacturing operations caused by the March 11 earthquake and tsunami that hit Japan. Sony was forced to close several of its factories because of damage sustained in the twin disasters, and that reduced its overall production. While sales were hit, Sony said the majority of the costs associated with repairing the factories will be covered by insurance.
For its fiscal year from April to March 2012, Sony reduced its expectations for both sales and profits.
In May, Sony said it was hoping to achieve sales of ¥7.5 trillion, and a net profit of ¥80 billion in the current financial year. Those targets have now been cut to ¥7.2 trillion and ¥60 billion respectively.