May 10, 2012 / 7:02 AM / 8 years ago

Instant View-Sony forecasts rebound to profit after record loss

TOKYO (Reuters) - Japanese consumer electronics giant Sony Corp posted a record net loss of 457 billion yen ($5.7 billion) for the year just ended, hit by losses from its TV business, but forecast a return to profit at an operating level in the current year.

KEY POINTS

- Sony sees annual operating profit of 180 billion yen vs 173 billion yen consensus.

- It also forecast a net profit of 30 billion yen

- Sees annual LCD TV sales at 17.5 million units, an 11 percent decline from a year earlier

- Sees sales of its PlayStation game consoles also falling 11 percent.

- Sony shares, valued at below $15.5 billion, this week slipped to a quarter century low of 1,206 yen. They ended down 1 percent at 1,213 yen on Thursday.

COMMENTARY

KENICHI HIRANO, OPERATING OFFICER, TACHIBANA SECURITIES, TOKYO

“The numbers don’t look too bad, especially when you take into account its current share price. If we believe that the results from the year just ended represent the bottom and that earnings are going to return to normal levels, then I would say the stock is oversold and I do think some market participants will acknowledge that.

“This year’s operating profit forecast of 180 billion yen is not far off the level seen two years ago... This suggests that we are on a recovery trend and last year was definitely the bottom. But I think that not every one in the market is convinced of this, especially since the company lacks a solid plan to turn around its TV business.”

SR KWON, TECH ANALYST, DONGBU SECURITIES, SEOUL

“Will Sony get much better as time goes by? I am not that optimistic. Sony’s problem is not just the currency. The bigger problem is that it has failed to catch up with consumer trends in TVs and handsets.

“Sony’s TV sales and market share will further fall, as the company focuses on profitability. South Korean rivals Samsung and LG are consolidating their lead, helped by their price competitiveness.

“In the handset business, without big innovations, Sony will still be a second-tier smartphone market player. I am not simply impressed by Sony smartphones.”

MITSUSHIGE AKINO, CHIEF FUND MANAGER, ICHIYOSHI ASSET MANAGEMENT

“I think the numbers are all within expectations... The only positive was the mobile game VITA and PSP numbers, but I guess they don’t really have anything other points to highlight. I wouldn’t take it (the figure) at face value though.

“Share price-wise, I think the news has already been priced in. But the fact that it’s undervalued or oversold is not enough of a reason to buy the stock.

“The new CEO has strong presentation skills and is quite charasmatic. But the focus is on how he plans to sort out the TV business. We need to see details - that is what market participants expect and what they need to see for the market to react positively.”

BACKGROUND

- Under new CEO Kazuo Hirai, Sony is slashing costs and jobs in a bid to turnaround its struggling TV unit. While considering partnerships to help Sony compete better in TVs, Hirai is looking to cameras, gaming and smartphones to spur growth.

- Sony is cutting 10,000 jobs - 6 percent of its global workforce - and will take a 75 billion yen restructuring charge this business year. The company underwent two rounds of layoffs during previous CEO Howard Stringer’s six-year tenure.

Reporting by Mari Saito in Tokyo and Hyunjoo Jin in Seoul; Editing by Edwina Gibbs

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