Sony warns that its net loss for the year ending in March will be much greater than expected, possibly as high as ¥230 billion ($2.15 billion), after being hit with a ¥180 billion ($1.7 billion) impairment charge in its Mobile Communications segment.
The Japanese consumer electronics giant had previously forecast a net loss of just ¥50 billion ($466 million). Its previously-predicted ¥140 billion ($1.31 billion) operating profit has been revised to a ¥40 billion ($372 million) loss.
Kazuo Hirai, who became Chief Executive in 2012 with assurances that he would turn the struggling company round, has so far announced six downward revisions since taking the helm.
Kenichiro Yoshida, Sony’s Chief Financial Officer, who started in that position in April this year, must also be blushing. When he came in he promised to be more realistic when issuing the company’s guidances.
Two months ago, when Mr. Yoshida cut Sony’s profit outlook for its smartphone business, he had warned that the firm might write down losses on its Mobile Communications unit for this fiscal year, but he remained bullish regarding the full-year forecast.
Fierce competition from Samsung and Apple has forced Sony to reduce its smartphone sales forecast. This is a serious blow to the company, which had hoped to rebuild its business partly on its smartphone business.
In its quest for new sources of income, earlier in September Sony unveiled a new range of watches and also launched a smartphone that can integrate with the PS4 PlayStation console.
The company says it had overestimated its Mobile Communications revenues from tablets and smartphones and decided to alter its strategy.
As a result of the impairment charge, Sony says it will not be paying a dividend in this fiscal year. Ever since the company was listed in 1958, it has always paid a dividend.
“The company’s dividend policy is to determine the amount of dividends based on consolidated operating results, financial condition and future business expectations. In light of the downward revision in this fiscal year’s forecast for consolidated financial results due to the impairment charge in the Mobile Communications segment announced today, Sony has determined to pay no interim dividend or year-end dividend for the fiscal year ending March 31, 2015.”