Sony Slashes Profit Outlook By 70%, Curses Abenomics

Tyler Durden's picture

As none other than the CEO of Sony explained 11 months ago, with regards Abe's strategy to weaken the JPY to encourage growth, "we are actually at a disadvantage [with a weaker JPY].. the preconception that a weaker JPY is good for all is, unfortunately for us, not true against the USD." And so 11 months on and Sony's profits and revenues are collapsing as the 'giant' electronics firm cuts its earnings outlook for the third time in a year. How bad is it? Sony posted a net loss of 130 billion yen ($1.3 billion) in the 12 months ended March... compared with a February loss projection of 110 billion yen, which was itself a reduction from a revised October forecast for profit of 30 billion yen. As one analyst noted, "There is no stop to their downward revision of earnings." So much for Abenomics?

As Bloomberg reports,

Sony posted a net loss of 130 billion yen ($1.3 billion) in the 12 months ended March, the Tokyo-based company said in preliminary earnings reported today. That compares with a February loss projection of 110 billion yen, which was itself a reduction from a revised October forecast for profit of 30 billion yen.

 

The wider loss is a setback to Hirai’s plan to revive the fortunes of the Japan technology icon with new game consoles, smartphones and cost cuts. While the PlayStation 4 has won sales, Sony is struggling to come up with other hits as demand for traditional products like televisions, cameras and personal computers decline.

 

“There is no stop to their downward revision of earnings,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co. “They can’t get into a growth stage, and it’s difficult to recover. Unless they announce sales of the TV business, the market won’t think Sony is serious.”

Which comes just 11 months after the Sony CEO warned the world that a weaker JPY - the ubiquitous strategy for growth of Shinzo Abe - was actually a disadvantage for the giant Japanese firm (forward to 9:15)... in a brief moment of truth on CNBC, the CEO of Japan's mega corp Sony admitted that while, "the preconception is that a weaker Yen is good overall. Unfortunately for us, versus the USD, it goes the other way."

The Guardian adds that the firm is now actively trying to sell off less profitable businesses...as suggested by Dan Loeb

Sony's chief executive, Kazuo Hirai, has spent the last two years selling off key assets in a bid to restore profitability at the firm's struggling electronics division, where TVs have lost $7.8bn over 10 consecutive years.

The sell-offs included the sale of its US headquarters building in New York for $1.1bn as well as two major buildings in Tokyo for $1.2bn.

...

Sony said it would spin off its TV division into a separate business and sell its Vaio PC business when it announced its third-quarter earnings in early February. A further write-down of the PC division would add another ¥30bn in costs for 2013-14, Sony announced on Thursday.

Well played Abe... of course - none of that profitability stuff matters...

The stock is down 1 % so far this year after surging 90 % in 2013