Sony Is Seen Posting First Operating Loss in 14 Years

Sony is expected to post an operating loss of about 100 billion yen ($1.1 billion) for 2008/09, the Nikkei business daily reported, far short of the company forecast for a profit of 200 billion yen.

The operating loss—the first in 14 years for the maker of Bravia flat TVs and PlayStation 3 video game consoles—could be double that, depending on inventory conditions in the January-March quarter, the Nikkei said it had learned.

Shizuo Kambayashi / AP

Analysts on average see an annual profit of 18.5 billion yen, a poll of 18 brokerages by Reuters Estimates showed.

Sony spokeswoman Mami Imada said the loss figure was  speculation and declined to comment further on the report, which was also appeared in Kyodo News and other media. The company is scheduled to announce its quarterly earnings results on Jan. 29.

Sony ADRs fell 1.9 percent to $23.10 on the New York Stock Exchange on Monday. In Tokyo trade Tuesday, Sony shares were nearly 9 percent in early trade.

In October, Sony forecast a full-year operating profit of 200 billion yen for the year to March 31, down from 475.2 billion yen in 2007/08.

In December, it said it would cut 16,000 jobs, curb investment and pull out of some businesses to save $1.1 billion a year as the global recession hits demand for its products.

The loss would be only the second since Sony went public in 1958 and the first caused by troubles in its mainstay electronics business, the Nikkei said.

A one-time charge related to the company's U.S. film studio business was primarily responsible for the previous operating loss, reported for the year ended March 1995, it said.

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Weak sales and costs to clear up inventories will likely lower Sony's profit by about 100 billion yen from its October forecast, and slumping sales and price falls of liquid crystal display (LCD) TVs and digital cameras in October-December quarter are seen sending the firm into an operating loss, the paper said.

Also, in addition to restructuring charges and possible further losses on exchange rates, Sony is expected to write down roughly 50 billion yen of its holding in Sony Life Insurance Co, the newspaper said.

Many analysts expect Sony to undertake further restructuring steps, but the company this month denied a report in the Times of London newspaper that it planned to announce closures of Japanese factories and major divisions next month.

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