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Sony expects annual net loss of $3.2 billion

by Staff Writers
Tokyo (AFP) May 23, 2011
Japan's Sony on Monday said it expected to post a $3.2 billion net loss for the fiscal year ended March, after delaying its corporate results to gauge damage from the March 11 earthquake and tsunami.

The expected third-straight annual loss for Sony comes as it tries to recover from the impact of the disasters and a massive online hacking attack that compromised millions of users of its network services.

In a preliminary earnings statement, it revised February's forecast for a 70 billion yen net profit to a net annual loss of 260 billion yen ($3.2 billion), citing a 360 billion yen non-cash charge set aside for deferred tax assets.

The firm, which is due to report its full earnings on Thursday, added that it expects to return to profitability in the current year.

The technology and entertainment giant said consolidated sales and operating revenue are expected to be in line with February's forecasts despite the impact of Japan's 9.0 magnitude earthquake and tsunami on production.

The maker of PlayStation consoles and Bravia televisions was forced to shutter plants after the disasters battered supply chains and damaged facilities.

It said the impact of the earthquake on sales was estimated to be approximately 22 billion yen, while it expects to record 12 billion yen in charges related to idled plants and insurance policy previsions.

Sony said it also expected a 5 billion yen net margin loss associated with a decrease in sales following a post-earthquake drop in consumer demand.

Expenses related to repairs, clean-ups and damages caused by the disaster were expected to result in an 11 billion yen impact, it said, although most of this was expected to be offset by insurance.

Chief financial officer Masaru Kato warned: "We expect a significant impact (from the disaster) on our manufacturing division in the April-June period" before business conditions recover as the impact of the disasters recedes.

Casting a further shadow are recent cyber attacks involving the theft of personal data including names, passwords and addresses from more than 100 million accounts on its PlayStation Network and Sony Online Entertainment services.

Sony shut down the PlayStation Network and Qriocity services on April 20.

The company has said it cannot rule out that millions of credit card numbers may have been compromised.

On Monday it said the data breach will result in at least a $170 million hit in "currently known costs" to operating profit this financial year in terms of insurance and damages.

Kato said the estimate did not include costs related to possible lawsuits over the data breach.

"At this moment, we have not received any reports of credit card data being abused, but any such cases would change the cost estimated for the damage," he told a news conference.

"There are some lawsuits being filed. These costs are not being factored in in the estimated damage."

Sony has said it plans to fully restore PlayStation Network and Qriocity services by the end of the month.

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