Tokyo — Sony warned today it would report an annual operating loss of $2.9 billion for its fiscal year ending on March 31, due to lower consumer demand, price erosion and currency fluctuations.
The operating loss warning was higher than a report from the Nikkei business newspaper, here, last week that said the loss would be $1.1 billion, according to undisclosed sources. At the time, Sony did not comment on the report.
This is reportedly the first annual loss Sony will report in 14 years.
Sony’s revised consolidated results forecast also said its loss before income taxes should be $2.2 billion and its net loss should be $1.6 billion for the year. Sony also blamed the impact of the declining Japanese stock market and an increase in expected restructuring charges for the loss. Sales and operating revenue are expected to go down 13 percent from the previous year to $85.5 billion.
Sony announced that it would do the following to cut expenses:
* close TV design and manufacturing operations at Sony EMCS’s Ichinomiya TEC by June 2009, with Japan operations to be consolidated at Inazawa TEC; and
* see growth in “emerging markets and the resulting demand for more entry-level models,” which Sony will “pursue further OEM/ODM deployment and a far-reaching asset light strategy.”
Sony will also standardize global hardware and software design and integrate design and R&D around the world, as well as outsource some software development. It said it is targeting a “global headcount reduction of approximately 30 percent across its TV design operations and related divisions by the end of the fiscal year ending March 31, 2010.”
Top executive bonuses for the fiscal year ending March 31 will be “substantially reduced” and there are plans in place to “decrease fixed remuneration ... in particular the three representative corporate executive officers will waive their entire bonus amount” for the fiscal year. Management-level employee bonuses and base salaries will also be reduced.
Sony will also introduce an early retirement program in the near future.
In December, Sony announced it would cut a total of 16,000 jobs, lower spending and close plants, which would save $1.1 billion.
On Jan. 29 Sony will report its fiscal third-quarter results. Preliminary numbers show a 25 percent drop in sales and a 95 percent drop in net income, both in yen.
(The yen/U.S. dollar conversion rate for Sony’s revised consolidated results forecast is 90 yen per $1 in this story.)