Tokyo - Sony shares plunged on Tuesday on reports that the electronics giant is set to post its first annual operating loss in 14 years because of a slump in demand and a strong yen.
Sony, a bellwether of corporate Japan, is expected to post an operating loss of ¥100bn for the financial year to March 2009, the Nikkei business daily reported citing unnamed company sources.
Weak sales during the crucial year-end holiday season may even saddle the firm with an operating loss of as much as ¥200bn, the Nikkei said.
A company spokesperson declined to comment on the report, which sent Sony shares down 8.0% to ¥2 020 in morning trade.
Sony, struggling to keep up with rivals such as Apple and Nintendo, has issued two profit warnings since last July.
Under its first foreign boss, Howard Stringer, a Welsh-born US citizen, Sony has shed non-core assets and axed thousands of jobs in recent years. Last month it announced 16 000 more job cuts along with factory closures.
"Poor demand in the US and Europe, as well as the yen's surge, have had a huge impact on the company," said Daiwa Institute of Research analyst Kazuharu Miura, who expects Sony to lose ¥110bn this financial year.
Sony has been particularly hard hit by the current economic downturn because it was already burdened with large restructuring costs, while turmoil on global markets has hit the company's financial arm, Miura said.
A loss would be a dramatic turnaround for Sony compared with last year, when its operating profit surged 421.9% to ¥374.48bn, helped by the sale of property and semiconductor operations.
Before the economic crisis erupted the electronics icon had been recovering from a difficult spell in the face of tough competition from rival products such as Apple's iPod and Nintendo's Wii.
But despite a rocky start for the PlayStation 3, Miura said Sony's game division could be a bright spot next year as the video game industry remains relatively immune to the global economic downturn.
Other Japanese electronics giants 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.
Toshiba is expected to log an operating loss of about ¥200bn for the current financial year to March, the first such loss in seven years, because of red ink at its semiconductor business, the Nikkei reported.
- AFP