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Sony may post $1.1 bln op loss, first loss in 14 yrs

Tue Jan 13, 2009 11:39pm IST
 
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By Kentaro Hamada and Sachi Izumi

TOKYO (Reuters) - Japan's Sony Corp will likely suffer an annual operating loss of about $1.1 billion, its first such loss in 14 years, due to sluggish sales and a stronger yen, a person with knowledge of the matter said.

Shares of Sony tumbled 9 percent, slicing $2 billion off its market value to $22 billion, while rival Toshiba Corp dropped more than 8 percent after Japanese media said it too was headed for a big loss this financial year.

The global economic slump has dampened demand for electronics products, causing inventories to pile up and prices to tumble, and Sony is feeling the pinch of the downturn in every corner of its operations, which range from semiconductors to movies and insurance.

If it posts such a loss, management could come under pressure to pursue bolder restructuring than the plan unveiled last month that called for curbing investment, exiting businesses and cutting 16,000 jobs. That included 8,000 regular workers, or roughly 4 percent of its global workforce.

"I think there's a good chance the company will further accelerate its restructuring from what has been announced in December," said Daiwa Institute of Research analyst Kazuharu Miura.

Sony will likely need to pursue more drastic measures, such as laying off more full-time employees and selling its financial unit which has been hurt by falling stock prices, market participants say.

Sony may post an operating loss of 100 billion yen ($1.1 billion) in the business year to March 31, instead of its previously estimated 200 billion yen profit, said the source, who spoke on condition of anonymity because Sony has not yet revised its forecasts.

The Nikkei business daily had reported earlier that the loss could double to around 200 billion yen depending on the extent of inventory build-up in the January-March quarter.  Continued...

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