Today, Sony once more slashed its financial forecast for the just-ended business year, citing the company's exit from the PC market and the continuing decline in consumer interest in DVDs, Blu-rays and other physical media.
According to the company, for the fiscal year ending March 31, 2014 the company now expects to incur a net loss of 130 billion yen ($1.27 billion). This is larger than February's original estimate of a 110 billion yen ($1.07 billion) loss. Operating income is now expected at 26 billion yen as opposed to previous forecasts of 80 billion yen.
This is the third time this fiscal year that Sony has revised its financial forecast. Company head Kazuo Hirai is now in the spotlight as investors and analysts are scrutinizing the company's business strategy.
"To be honest, I really wonder if he's got a grip on what's going on with all his businesses," portfolio manager at Tokyo-based Bayview Asset Management Yasuo Sakuma told Reuters. "Cutting forecasts at this time; are they trying to hide something or have they lost it?"
"It is another major letdown," Tomoichiro Kubota, senior market analyst at broker Matsui Securities Co. told The Wall Street Journal. "The contrast is stark with Sony anticipating a bigger loss while other companies are starting to enjoy the fruits of their restructuring measures."
In February, Sony announced it will sell its PC business and exit the PC market — the company expects an additional 30 billion yen in additional expenses for the fiscal year related to this move. The company reports that PC sales for the fiscal year that ended on March 31, 2014 and expected PC sales for the fiscal year that will end on March 31, 2015 were already underperforming the forecast put forth in February, and "record write-downs" are expected for excess components and expenses accrued to compensate components suppliers.
Additionally, Sony is expecting 25 billion yen in impairment charges related to overseas disc manufacturing, which has slowed with the growing popularity of digital media and downloadable content.
"Primarily due to demand for physical media contracting faster than anticipated, mainly in the European region, the future profitability of the disc manufacturing business has been revised," reads Sony's statement. "Consequently, Sony has
determined that it does not expect to generate sufficient cash flow in the future to recover the carrying amount of long-lived assets, resulting in an expected impairment charge.
"Primarily due to the reason mentioned above, the fair value of the entire disc manufacturing business also has decreased, resulting in an expected impairment of goodwill."
Sony will release its full consolidated results for the fiscal year that ended on March 31, 2014 — which includes last fall's launch of the PlayStation 4 console — on Wednesday, May 14.