Sony, the Japanese electronics company, said Thursday that it would post a record annual operating loss of nearly $3 billion because of the rapid deterioration of the global economy and it announced a major restructuring that will include layoffs and factory closings.
The company said business had been worsening across every major line, including electronics, games, movies and financial services. The global economic crisis has reduced demand for Sony's products, which range from televisions and cameras to movies and PlayStation 3 game consoles, even as the rise of the yen against other currencies reduces the value of its overseas sales when the revenue is converted into yen.
The announcement Thursday marked the second downward revision Sony has made to its current-year forecast, after a similar move in October.
Sony said its three top executives would forgo their bonuses for the current fiscal year, and that bonuses and salaries would be reduced for other senior executives and corporate managers.
Sony, long one of Japan's most visible companies, projects an operating loss of 260 billion yen, or about $2.9 billion, for the current business year, compared with a profit of 475.3 billion yen a year earlier. The new estimate represents a deterioration of 60 billion yen from the company's October forecast.
The dollar has fallen nearly 20 percent against the yen since mid-August, while the euro has lost almost 30 percent in the same period.
The company said it expected to book restructuring charges of 60 billion yen this year and 110 billion yen next year as it works to cut 250 billion yen in costs next year.
Sony will cut about 1,000 contract workers in Japan as it consolidates production at two LCD television plants into one. The company's television business has been losing money for the last four years. Sony will also implement an early retirement plan and said it was planning a "significant reduction" in marketing and other expenses. Sony's business year runs from April through March.
It said that for the current year it expected sales to fall 13 percent from last year, to 7.7 trillion yen, and that it expected a net loss of 150 billion yen — its first net loss in 14 years — compared with a profit of 369.4 billion a year earlier. The company will announce its third-quarter results next Thursday.
The company announced its new forecast after the close of trading in Tokyo but Sony shares fell 2.6 percent for the session. The stock has declined by nearly 65 percent over the last 12 months.
Source:http://www.iht.com/articles/2009/01/22/business/sony.1.php
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