Sony announces its first loss since 1995

The electrical goods-maker suffered its first loss for fourteen years as the global economic crisis dampened demand for its products. It was also hit by the effects of the yen’s strength against the world’s major currencies in the period, which affected sales to the US and Europe.

It made a net loss of Y98.9bn for the year to March, on worldwide sales which were 12.9 per cent lower than last year, although the overall loss was not as bad as it had forecast in January, when it said it would lose Y150bn.

The Japanese giant is currently going through a restructuring process, led by British chief executive Sir Howard Stringer, but it warned it could go further into the red in the year to come. It has previously announced plans to cut 8,000 of its 185,000 workers worldwide and close 10 per cent of its factories.

It is all a very different picture from last year, when Sony made a Y369.4bn profit, but it is in good company, with other leading Japanese companies like Toyota and Hitachi also struggling in the difficult environment.

Sony has been struggling in its battle with Nintendo in games machines, with the Wii taking market share from its PlayStation 2. Meanwhile its newer PS3 has not made up the slack as yet.

Analysts' reactions to the results were mixed, with some cautiously optimistic about the fact that the results were not worse, while others expected things to get worse before they improve.

WHAT THEY ARE SAYING
Nobuo Kurahashi, Mizuho Investors Securities, in the Guardian: "The results and forecasts seem very average. What I really want to know is how Sony is going to compete after the economy recovers. Cost-cutting and wringing profits out the TV division are important, but that will only take you so far. Sony focuses a lot of attention on portable devices with network capability. That doesn't seem to be going well, so it's difficult to expect profits from that business. Sony is spread out too thin and hasn't shown what new product group will take it into the future."

Tim Kelly, Forbes.com: "In February, Stringer, who flits between Tokyo and New York, added president to his job description, removing veteran Sony executive Ryoji Obuchi from the post. That management tweak gives him direct control of Sony's core electronics business, a move that investors applauded. Since then, Sony’s shares hve gained 43 per cent, double the gain in the benchmark Nikkei 225 index over the same period. With the profit crisis at Sony far from over, for the time being at least, it looks like Stringer gets to wield his knife at will." ·