Battery woes burn deep holes in Sony’s Q2 net
Sony, the world’s second-biggest maker of consumer electronics, said second-quarter profit fell 93% after personal-computer makers recalled 9.6m of its batteries because some were fire hazards.
By Agencies |
NEW YORK: Sony, the world’s second-biggest maker of consumer electronics, said second-quarter profit fell 93% after personal-computer makers recalled 9.6m of its batteries because some were fire hazards.
Net income slid to ¥2bn ($16.8m) in the three months ended September 30, from ¥28.5bn a year earlier, the Tokyo-based company said in a preliminary earnings statement on Thursday. Sony also cut its annual profit forecast 39%.
The recall and delays for Sony’s PlayStation 3 game console undermine Howard Stringer’s plan to revive earnings after an unexpected loss in ’03 that led to his appointment last year as the company’s first foreign-born chief executive officer.
“The reform process at Sony is not fully complete,” said an analyst. “The issues may have been deeper than they expected.” Sony said it will incur ¥51bn in the quarter for the battery recall, the largest in the consumer-electronics industry. Losses at the game division will be wider than expected because of a planned price cut for its PlayStation 3 and slower than anticipated sales of the PlayStation Portable, it said.
“It’s not clear whether ¥51bn will be sufficient to cover the battery recall cost,” said Osamu Hirose, an analyst at Tokai Tokyo Securities. The company posted a second-quarter operating loss, or sales minus the cost of goods sold and administrative expenses, of ¥21bn, compared with a ¥65.9bn profit a year earlier.
Sales rose 9% to ¥1.85 trillion.
However, this downward profit revision does not factor in any lawsuits that might arise from a global recall of its laptop personal computer batteries.
Toshiba said on Monday it may seek compensation from Sony for possible damage to its brand image and loss of potential sales due to the recall.
Net income slid to ¥2bn ($16.8m) in the three months ended September 30, from ¥28.5bn a year earlier, the Tokyo-based company said in a preliminary earnings statement on Thursday. Sony also cut its annual profit forecast 39%.
The recall and delays for Sony’s PlayStation 3 game console undermine Howard Stringer’s plan to revive earnings after an unexpected loss in ’03 that led to his appointment last year as the company’s first foreign-born chief executive officer.
“The reform process at Sony is not fully complete,” said an analyst. “The issues may have been deeper than they expected.” Sony said it will incur ¥51bn in the quarter for the battery recall, the largest in the consumer-electronics industry. Losses at the game division will be wider than expected because of a planned price cut for its PlayStation 3 and slower than anticipated sales of the PlayStation Portable, it said.
“It’s not clear whether ¥51bn will be sufficient to cover the battery recall cost,” said Osamu Hirose, an analyst at Tokai Tokyo Securities. The company posted a second-quarter operating loss, or sales minus the cost of goods sold and administrative expenses, of ¥21bn, compared with a ¥65.9bn profit a year earlier.
Sales rose 9% to ¥1.85 trillion.
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For the full year, net income is projected to drop to ¥80bn, compared with its previous forecast for ¥130bn and ¥123.6bn reported a year earlier, the company said. Operating profit will fall 62% to ¥50bn. The sales forecast was kept at ¥8.23 trillion.However, this downward profit revision does not factor in any lawsuits that might arise from a global recall of its laptop personal computer batteries.
Toshiba said on Monday it may seek compensation from Sony for possible damage to its brand image and loss of potential sales due to the recall.
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