Japan’s Sony Corp turned in a record $6.4bn (£4.2bn) annual net loss, double an earlier forecast and a fourth consecutive year of red ink, as it wrote off deferred tax credits, heaping more pressure on its new chief executive to turn around the electronics giant.
Sony has been hammered by weak demand for its televisions and overtaken by more innovative gadget rivals such as Apple Inc and Samsung Electronics.
Yet, in an attempt to ease investor concerns over its deteriorating bottom line, Sony forecast it would bounce back in the current year to the end of March 2013 with an operating profit of $2.2bn (£1.4bn).
Sony plans to axe 10,000 jobs – around six per cent of its global workforce – according to reports this week.
Kazuo Hirai, who took over as chief executive this month, has said he is prepared to take “painful steps” to revive the company, insisting he would not hesitate to scale back or withdraw from businesses he deemed uncompetitive.
The Sony veteran, known for reviving the PlayStation gaming operations through aggressive cost-cutting, has promised to get the struggling TV business back on its feet within two years.
Chief financial officer Masaru Kato said at a briefing in Tokyo yesterday there had been several reasons for the poor results, including a strong yen and poor demand.
In a fourth revision to its annual estimates, Sony forecast a $6.4 bn net loss for the year to the end of March this year. The annual results are due on May 21.
The additional loss is from writing off deferred tax assets primarily in the United States – credits built up to use against future taxable profits which have been written off due to the company’s consistent losses.
Mr Kato, who would not confirm the reports of job losses other than to note there would be cuts in a chemical business and small LCD unit that are being hived off, said Sony had no plans to raise money through a share offering or other equity finance.
“We can improve shareholder equity in several ways, including bolstering cash flow or selling assets,” he said. “Equity finance is also an option, but at this moment we have no concrete plan to do so.”
Recently, Sony pulled out of an LCD panel venture with Samsung, enabling it to obtain screens for its TVs more cheaply. It also agreed to buy out Ericsson’s half of their smartphone venture for $1.5bn to shore up its market position.