Sony Continues Money-Losing Streak
TOKYO – Money-losing Sony Corp. (SNE) led a dismal day of earnings for Japanese electronics companies Thursday as the entertainment and consumer products company slashed its full-year profit forecast by nearly 90 percent and reported a second-straight quarter of losses.
Toshiba Corp. (search), Hitachi Ltd. (HIT) and NEC Corp. (NIPNY) also posted losses as Japanese electronics companies fight falling prices and increased competition from cheaper Asian manufacturers such as South Korea's Samsung Electronics Co. (search).
Japanese rivals that have already embarked on restructuring plans, such Matsushita Electric and Fujitsu Ltd., stood apart Thursday for posting improved results.
Sony said it now expects net income of 10 billion yen ($89.3 million) for the year ending March 31, 2006, compared with an April forecast of 80 billion yen ($714 million). Sales will be 7.25 trillion yen, 3 percent lower than its April outlook, the Tokyo-based company said in a statement.
Sony blamed the downgrade on bigger than expected restructuring costs, falling electronics prices and sliding television sales. In March, the company appointed Howard Stringer chairman, the first foreigner to head a major Japanese electronics firm, to improve results at Sony's faltering core electronics business.
Sony posted a net loss of 7.3 billion yen ($65.2 million) in the three months ended June 30, compared with a profit of 23.3 billion yen a year earlier. That followed a fourth-quarter loss of 56.5 billion yen.
Sales fell 3.3 percent to 1.56 trillion yen ($13.9 billion) in the first quarter.
The results were slammed by a 15.9 billion yen ($142 million) restructuring charge, of which 15.5 billion yen was dedicated to reviving the electronics units.
Toshiba Corp. widened its first-quarter loss amid declining sales of flat screen displays and falling prices for computer chips.
Its loss totaled 8.9 billion yen ($79 million) in the three months ended June 30, bigger than the 7.8 billion yen loss it had a year earlier. Overall sales rose 4 percent to 1.298 trillion yen ($11.6 billion), from 1.247 trillion, but sales in its key electronic devices division dropped 11 percent to 294 billion yen ($2.6 billion).
Toshiba said its electronic devices division was hit by falling sales of liquid crystal displays for personal computers and by price drops of the flash memory chips used in items like digital cameras and mobile phones.
Falling prices for LCDs and telecom equipment also bruised Hitachi Ltd., which reported a loss of 24.1 billion yen ($214 million) in the April-June quarter, compared with a profit of 16 billion yen in the same quarter a year earlier, the Tokyo-based company said in a statement.
Sales at Tokyo-based Hitachi edged downward less than 1 percent to 2.05 trillion yen ($18.3 billion) from 2.06 trillion yen.
The company expects to break even with no profit in the first half of the current business year, with a 2 percent increase in sales to 4.4 trillion yen ($39.3 billion). It said growing demand in Asia would help offset a slumping market in the United States and Japan.
To improve profitability, Hitachi has been trying to diversify, turning to hybrid technology for cars and joint ventures with rivals for making LCD panels and plasma displays, both of which are increasingly used for new TVs. It has also tried to expand overseas, where sales growth is stronger than at home.
NEC Corp. fell deep into the red in the quarter, blaming persistent weakness in semiconductor prices.
It suffered a group loss of 10.9 billion yen ($97.3 million) in the quarter, after a profit of 20.9 billion yen in the same period a year earlier.
Matsushita Electric (MC), the Osaka-based manufacturer of the Panasonic brand, said profit grew 2 percent in the April-June quarter, as restructuring and cost-cutting measures offset a slump in sales and increased raw materials costs.
Profit was 33.4 billion yen ($304 million), from 32.8 billion yen the previous year. The company also forecast a strong performance for the current quarter.
The gains came despite a 3 percent drop in sales to 2 trillion yen ($18.62 billion), from 2.102 trillion yen in the same three-month period a year ago, Matsushita said.
Tokyo-based Fujitsu returned to profit in the April-June quarter on an increase in sales led by hard disk drives, mobile phones and next generation mobile phone base station equipment.
Income was 2.5 billion yen ($22.3 million), compared with a loss of 11.8 billion yen a year earlier. Sales rose 1.8 percent to 1.03 trillion yen ($9.2 billion) from 1.01 trillion yen.
Earlier this year, Fujitsu left the plasma display panel business amid intensifying competition and falling panel prices. The company said Wednesday it is expecting a smaller than expected first-half loss as growing demand for mobile phone equipment and hard disk drives offsets sluggish global spending on information technology.