Sony Reports Second Consecutive Quarterly Loss

As predicted by industry analysts, the Japanese-headquartered electronic giant Sony Corporation has posted its second consecutive quarterly loss, and revised its expectations downward for the fiscal year. The company posted a net loss of 7.3 billion yen ($65 million USD) for the quarter ending June 30th. Sony's revised forecast for annual net income has been lowered to 10 billion yen ($89 million USD) from an April prediction of 80 billion yen ($713 million USD). The downward revision comes in spite of newly named CEO Howard Stringer's self-imposed deadline of 100 days to reverse Sony's bad fortune. Analysts are less optimistic about the company's position and Stringer's role in particular; Yuuki Sakurai of Fukoku Mutual Life Insurance commented to the Bloomberg News agency that "Mr. Stringer is a software man. Sony's problem lies in the hardware businesses. We have no reason to be very optimistic for the near future for Sony." Yoji Takeda of RBC Investment Management Asia was less sharply critical but still skeptical, saying Sony "is in a very difficult position. The existing products aren't doing very well, there are a lot of pricing pressures and their investments are very heavy." Although Sony's consumer electronics division, which includes televisions and computers, had the heaviest loss, the games division also went from a 2.88 billion yen ($25.6 million USD) loss in 2004 to 5.9 billion ($52.5 million USD) loss this year, partly as a result of PlayStation 3 research and production costs. Further losses may result if Sony prices the system at or below manufacturing costs in an effort to compete with Nintendo's Revolution and Microsoft's Xbox 360 on price. However, the company is still relatively optimistic about prospects for its PSP handheld, recently revealing that thus far, 5.7 million PSP units had been shipped worldwide. The company also mentioned that it expected to ship 12 million PSP units in the current business year, and that the company expected to increase its monthly UMD manufacturing amounts from 3 million to 5 million, largely due to a greater variety of (and hopefully demand for) UMD movies.