Sony and Sharp warn of massive losses
Sony and Sharp, two of Japan's best-known electronics giants, on Tuesday warned of record losses in the billions of dollars as they struggle to survive amid fierce global competition.
Sony, the Tokyo-based maker of PlayStation consoles and Bravia televisions, blamed a tax charge for its expected full-year loss of 520 billion yen ($6.4 billion), more than five times its loss prediction in November.
Hours later, rival Sharp said its balance sheet for its latest fiscal year would carry a loss of 380 billion yen ($4.7 billion), owing to restructuring costs and delayed shipments of liquid crystal displays used in mobile devices.
That was up from Sharp's prediction in February of a 290 billion yen loss.
Both firms have earlier suffered credit rating downgrades in the wake of their expected losses, and reshuffled top management in a desperate bid to turn around their fortunes.
Panasonic has also made dire predictions about its results, warning it would see its worst-ever net loss of 780 billion yen ($9.6 billion).
Japan's electronics giants have suffered in recent years, particularly in their television business as rampant competition from foreign rivals has sent prices tumbling, together with the effects of a strengthening yen and a stuttering global economy.
In February, Sony said it expected to lose 220 billion yen, its fourth consecutive year in the red. Just three months earlier it had expected a 90 billion yen full-year loss.
On Tuesday, Sony's Chief Financial Officer Masaru Kato underscored the iconic firm's dire situation, saying "drastic steps" were necessary to stem losses at its TV division.
"We as management view this very seriously," he told a press briefing Tuesday.
"The television operation... we realise it is a major issue for us. We will take drastic steps to turn it profitable," Kato added.
His comments come just days before Sony's new chief executive Kazuo Hirai is expected to outline some of the "painful decisions and choices" that he earlier said were necessary to shake up the firm.
Sony has already shed its Welsh-born US chief executive Howard Stringer, with a report in the leading Nikkei business daily on Monday saying the firm would slash 10,000 jobs worldwide this year, or about 6.0 percent of its workforce, as it attempts to carry out sweeping reforms.
During an earlier restructuring announced in December 2008 amid the global financial crisis, Sony cut about 16,000 jobs worldwide.
Sony declined to comment on the report, which came less than a month after it announced the sale of its chemical division to the Development Bank of Japan, saying the unit did not fit with its restructuring plans.
Meanwhile, Sharp announced last month a deal with Taiwan's Hon Hai Precision as part of an LCD panel tie-up as it looks to save a balance sheet awash in red ink.
The Japanese firms have blamed tough competition from rivals including South Korea's Samsung, falling prices, slow demand, the impact of severe flooding in Thailand last year, and the high yen for their struggles.
The stronger yen hits Japanese exporters by making their products more expensive overseas, while eroding the value of foreign-earned profits.
Many Japanese firms were also hammered by last year's quake-tsunami disaster, which dented Japan's economy and sparked the worst nuclear crisis in a generation.