Sony slashes profit outlook with TV business back in red
TOKYO (Reuters) - Sony Corp cut its full-year profit targets after slipping to a quarterly net loss as its recovering TV operation relapsed into the red.
The Japanese electronics maker's worse-than-expected performance, a setback after years of striving to return to its former glories, also featured weak sales of video cameras and a steep slump in personal computers in the July-September quarter.
With a quarterly net loss of 19.3 billion yen ($197 million), Sony's bad-news Thursday came in stark contrast to an upbeat showing by Japanese peer Panasonic Corp. It also stirred doubts about how the best-known Japanese technology company can anchor a turnaround as rivals like Apple Inc and Samsung Electronics Co have gained dominance through heavy investment in new mobile devices.
"I still cannot see any fundamental and believable strategy for the rebirth of Sony's electronics business," said Makoto Kikuchi, CEO of Myojo Asset Management based in Tokyo.
"On the other hand Panasonic, which is shifting its business away from consumer electronics, is reporting better-than-expected results. The contrast is like night and day."
The TV operation flipped from a 5.2 billion yen operating profit in April-June - its first quarterly profit in three years - to a 9.3 billion yen operating loss.
Japan's consumer electronics makers have long been hobbled by losses from their TV operations, hit by stiff competition from Asian rivals. Many, like Panasonic, have been shifting their focus to industrial businesses such as infrastructure or supplying the auto sector, but Sony has stuck with its focus on the consumer business.
Overall, Sony cut its operating profit forecast for the year through next March to 170 billion yen from previous guidance of 230 billion yen, which would have been flat on the year.
The 170 billion yen forecast is below the average of 221 billion yen expected by 22 analysts surveyed by Thomson Reuters I/B/E/S.
Since Chief Executive Kazuo Hirai took the helm last year, Sony has promised a rebound in hardware with a three-pronged strategy focused on mobile devices, imaging technology and gaming.
But only a few of its consumer product divisions, including smartphones, showed signs of holding up in the latest quarter. Sony said it still expects to sell 42 million smartphones this fiscal year, unchanged from previous guidance.
There have also been signs of a strong debut next month in the U.S. and other key markets for Sony's new PlayStation 4 game console, based on preorders. As with previous consoles, development and rollout costs have been steep, although Sony has pledged to turn a profit much faster than the four years it took for the previous iteration of the console to make money.
Sony, under pressure from major shareholder and hedge fund manager Daniel Loeb to generate more value from its entertainment division, also posted a 17.8 billion yen second-quarter operating loss in its pictures division. Of eight divisions, only music and financial services units managed to boost profit from a year ago.
"I think we're at a stage where they really should be reconsidering their (three-pronged) strategy but the company is not going there yet," said Myojo Asset's Kikuchi.
(Reporting by Sophie Knight; Editing by Edmund Klamann, Ryan Woo and Kenneth Maxwell)