Sony's Predicted Losses Far Larger Than Expected News

As widely reported last week, Sony today revised its results forecast for the year ended March 31st 2009, confirming the company's first operating loss in 14 years.

The expected 260 billion yen (£2.10 billion) loss for the year is considerably larger than the 98.28 billion yen (£792.09 million) deficit predicted by financial analysts and the media last week.  The loss is attributed to sliding demand for Sony projects and a stronger yen, which has affected Japan's export industry - and we can't imagine consumer electronics proving too popular amongst Japan's ageing population.

The announcement will hasten Sony's chief executive Howard Stringer's restructuring plans, despite opposition from Sony's old guard against any severe cut backs in the company's native Japan.  Sony confirmed that it would double the cost-cutting target to 250 billion yen (£2.01 billion) of savings by the end of March 2010.  However leading financial analysts have warned that this will not be enough on its own.

Despite the loss largely being attributed to Sony's electronics division the Game division still appears to be in tumultuous times, with an expected loss of 30 billion yen (£241.78 million) for the fiscal year.  Although predicted sales of the PS3 for the year remain at 10 million units, it appears that Sony has reduced its forecast of PSP and PlayStation 2 sales by 1 million each.  Software sales are also expected to be down from last year, with combined sales down by 17.4 million units to 250 million.

Sony Computer Entertainment Europe president David Reeves has stated in the past the need for the division to return to profitability during 2009 after successive years of losses, but has maintained that the PS3 model is no longer based around price reductions following lowered manufacturing costs.  A report late last year suggested Sony was close to reducing PS3 manufacturing costs to break-even.