Sony faces record $2.9bn loss

Sony Corp.


has warned it expects its biggest-ever operating loss of 2.9 billion dollars as the global economic crisis saps demand for televisions, cameras and video game consoles.

The huge loss, which would be Sony\’s first in 14 years, underscores the depth of the problems facing the electronics industry as consumers cut spending amid a wave of global job cuts.

Chief executive Howard Stringer said he would speed up restructuring, closing a television plant in Japan with the loss of 1,000 jobs as part of efforts to save 250 billion yen a year.

“We must now embrace many difficult decisions in order deal with this new reality immediately,” Stringer told a news conference.

Sony will also outsource some software development to India, reduce its executive bonuses and introduce an early retirement programme. Last month it said it would slash 16,000 jobs and axe plants.

The iconic Japanese company said it expects an operating loss of 260 billion yen (2.9 billion dollars) for the current financial year to March, a dramatic reversal from an earlier goal of a 200-billion-yen profit.

Sony sees a net loss of 150 billion yen for the current year, compared with an earlier projection for the same amount in profit.

“This is worse than I\’d expected,” said Kazumasa Kubota, an analyst at Okasan Securities.

“Additional restructuring to cut fixed costs is necessary to staunch the bleeding,” he said.

“But just stopping the haemorrhage is not the final solution. You need a strategy to make a comeback, but I don\’t know who on earth can prescribe such a measure in the severe environment we face today,” he added.

Sony blamed the worsening business environment, the stronger yen, weak financial markets and restructuring costs for the bleak outlook.

Under Stringer, a Welsh-born US citizen, Sony has shed non-core assets and slashed thousands of jobs in recent years.

The huge loss would be a far cry from the operating profit of 475 billion yen the company made last year. It slashed its sales forecast to 7.7 trillion yen from 9.0 trillion.

The company has had a difficult few years in the face of tough competition from rival products such as Apple\’s iPod and Nintendo\’s Wii, but it had enjoyed a strong recovery last year.

Other Japanese companies are also facing tough times as consumers tighten their purse strings to cope with recessions in major economies from the United States to Japan and Europe.

Toyota Motor Corp. last month forecast a first-ever annual operating loss of 150 billion yen.

Sony\’s share prices closed down 2.56 percent at 1,938 yen Thursday ahead of the profit warning.