Sony cuts losses on sales recovery

Restructuring also credited as firm posts smaller dip in 2nd quarter

A man looks at Sony flat-screen televisions displayed Thursday at a Tokyo electronics store.
A man looks at Sony flat-screen televisions displayed Thursday at a Tokyo electronics store.

— Sony Corp. on Thursday reported a smaller flow of red ink for its fiscal second quarter attributed to a sales recovery and a restructuring effort.

The Japanese electronics and entertainment company recorded a $193 million loss for the July-September period, much better than the $337 million loss racked up the same period the previous year. Quarterly sales improved 1.9 percent to $20 billion.

The Tokyo-based maker of Bravia TVs and the PlayStation 3 game machine remains in deep trouble as does much of the Japanese electronics industry because of lower prices for flat-panel TVs, and competition from Apple Inc. and Samsung Electronics Co.

Sony, which reported a record annual loss of $5.7 billion for the fiscal year that ended March 31, its fourth straight year of red ink, stuck to its forecast for a $250 million profit in the current fiscal year.

Separately, Japanese electronics maker Sharp Corp. reported a fiscal first half loss of $4.9 billion.

Osaka-based Sharp did not break down quarterly results. It said it expects a $5.6 billion loss for the full fiscal year through March 2013. That would follow losses it racked up the previous fiscal year.

On Wednesday, Panasonic Corp. also reported losses and forecast a $9.6 billion loss for the fiscal year. That would mark the second-straight fiscal year of losses for the maker of the Viera TVs and Lumix digital cameras.

That would be worse than the record loss of $9.6 billion that Panasonic plummeted into for the fiscal year through March - already among the biggest in Japan’s manufacturing history.

Panasonic shares nose dived 19 percent in Tokyo trading Thursday, on the disastrous results delivered the day before.

Sony issues shed 4 percent. Sharp shares, which have lost about three-quarters of their value during the past year, edged down nearly 2 percent.

The plight of Japanese electronics makers underlines their failure to be nimble with innovation at a time when cheaper rivals are able to come out with similar products very quickly.

Panasonic tried to shift its operations to catering to other businesses such as solar panels and batteries, but even those sectors have been battered by price falls and aren’t proving as profitable as initially hoped.

Sony has promised to reshape its sprawling business, which includes video games, movies and music, to focus more on certain sectors such as mobile devices, game machines and medical equipment.

Sony is becoming the top shareholder in Japanese medical equipment maker Olympus Corp. Olympus holds the top global market share in endoscopes.

Olympus is mired in scandal after its British chief executive Michael Woodford became a whistle-blower, and the company later acknowledged its involvement in a cover-up of investment losses spanning decades.

Sony said it had carried out cost cuts in its flat-panel TV operations and sales improved in its mobile-phone segment, but sales faltered in its digital cameras because of the popularity of smart phones, according to the company.

It continues to lose money in its TV business, now in its ninth straight year of losses.

Its game unit also suffered as the drop in hardware and software sales of the PlayStation 3 home console was not offset by the sales of the new PS Vita hand-held machine.

Sony’s troubles were exacerbated last year by factory and supplier damage in northeastern Japan from the March earthquake and tsunami.

Sony is aiming for a comeback under Kazuo Hirai, appointed president in April, who headed the company’s game division and built his career in the U.S.

As part of its turnaround efforts, Sony recently sold its chemical products business. It also acquired U.S.-based Gaikai Inc. to set up a new cloud service, which delivers virtual storage, to expand interactive entertainment offerings.

Sony also plans to start selling a super TV next month called “4K” that has an 84-inch display delivering superior image quality.

Sony says it hopes to take advantage of its digital imaging and sensor technology for security and medical markets.

Business, Pages 29 on 11/02/2012

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