Sony reported a 27 billion yen ($346 million) loss for the latest quarter and downgraded its annual earnings forecast Wednesday to stay in the red for the fourth year straight, battered by the strong yen and poor sales of flat panel TVs.
The Japanese electronics and entertainment conglomerate is now projecting a 90 billion yen loss ($1.2 billion) for the fiscal year through March 2012 after earlier forecasting a profit of 60 billion yen ($769 million).
Sony Corp. said the strong yen and lower sales, especially in TVs, hurt July-September results. It also suffered production disruptions from the widespread flooding in Thailand, which came on top of the supply problems from the March tsunami disaster in northeastern Japan.
Sony also announced a plan to turn around its TV operations, which have lost money for the past seven years straight amid price plunges, an oversupply of panels and intense competition. It said the plan will make the TV business profitable by the fiscal year ending March 2014.
Sony said the major problem was a surplus of liquid crystal displays, and it would shrink its TV production from 40 million units a year to 20 million. It also aims to reduce display costs and the number of models. The restructuring would incur a 50 billion yen ($641 million) special charge, it said.
"Management is feeling a serious sense of crisis about the seven years of losses," said Executive Deputy President Kaz Hirai, who was added to speak at the earnings announcement at the last minute. "I promise to lead the turnaround plan to get us out of the red."
The poor quarterly results and forecast of another annual loss underline a troubled year for Sony.
The company is hoping to integrate smartphones with other consumer electronics, such as televisions and computers, as it seeks to play catchup with Apple Inc. Analysts say the maker of Bravia TVs and Walkman players needs to restore its reputation for innovative gadgets as Apple powers ahead with its iPod, iPad and iPhone.
Hirai, a candidate to succeed current CEO Howard Stringer to head Sony, said that in addition to fixing the money-losing TV business, a growth strategy depended on boosting the company's smartphone business, especially in the U.S.
He said Sony will work at attractive network services so that entertainment can be enjoyed on various gadgets, such as mobile phones, game machines and bigger displays.
Hirai said Sony is in talks with powerful South Korean rival Samsung Electronics Co. about the future of their flat panel joint venture that makes panels for Sony.
But he did not say any decision had been made. Japanese media had speculated Sony might pull out of the joint venture or sell part of it.
Sony's image also suffered a severe blow earlier this year because of a massive online security breach around the world, affecting more than 100 million online accounts.
Quarterly sales fell 9 percent from a year earlier to 1.58 trillion yen ($20 billion), mainly because of an unfavorable exchange rate. The yen has recently hit record highs against the dollar, which has faltered amid worries about the U.S. economy. A strong yen erodes the value of Sony's overseas earnings.
Sony, which makes about 70 percent of its sales outside Japan, is expecting the dollar to trade at about 75 yen for the rest of the year, down from about 85 yen a year earlier.
Plunging sales of liquid-crystal display televisions also hurt results, not only from price declines but also the economic slowdown in the U.S. and Europe, according to Sony.
The future of Sony's PlayStation game business is also unclear.
Its much hyped latest portable Vita is set to go on sale in Japan later this year, where it faces off against Japanese rival Nintendo Co.'s 3DS, which features 3-D gaming without glasses. But Vita won't be ready for the year-end holidays overseas.
In its film business, Sony returned to quarterly profit from losses the previous year, riding on the success of "The Smurfs," and higher TV revenue from cable programming, it said.
But it did not do much better in its music business compared with the previous year. Best-selling albums included Beyonce's "4" and Adele's "21."
Last month, LM Ericsson sold Sony its 50 percent stake in Sony Ericsson, a mobile phone joint venture with Sony, for $1.46 billion. The results from Sony Ericsson are reflected in the full year projections, as the deal is expected to close in January.
Tokyo-based Sony had a loss of 260 billion yen in its previous fiscal year.
Sony shares were down 4 percent to 1,520 yen in Tokyo, shortly before earnings were announced.
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