Sony Forecasts 130 Billion yen Loss; PS4 to Be Unprofitable For At Least Another Year

Kazuo Hirai took over as Sony’s CEO two years ago promising big changes and a return to profitability. Now some are calling for his resignation and he is facing increasing pressure from activist investors to spin off more businesses. Sony has slashed its earnings guidance for the third time this year. Investors are furious and the stock is down nearly 2 percent this morning. Sony now expects a 130 billion yen loss ($1.3 billion).  Sony’s market cap once nearly $70 billion now sits at around $20 billion.

Hirai recently brokered a deal to sell off Sony’s VAIO PC unit, but it appears this decision will come at some cost. The company said it would have to write down a further 30 billion yen ($300 million) on its Vaio PC unit, reflecting a sharp drop in sales as consumers shunned the brand following Sony’s decision in February to get out of the business. This was increased Sony’s restructuring costs for the year, which will now reach 70 billion yen.

Strong sales of the Playstation 4 console offer one bright spot, but development costs mean it could take at least another year to turn a profit. It appears the low cost of the console and aggressive international push of the PS4 has come at a price.

An analyst commented:

“To be honest, I really wonder if he’s got a grip on what’s going on with all his businesses,” said Yasuo Sakuma, a portfolio manager at Bayview Asset Management in Tokyo, who does not own Sony shares. “Cutting forecasts at this time; are they trying to hide something or have they lost it?”

Another Japanese continues company Panasonic continues to do well while Sony struggles. Sony is also being dominated by Samsung in many areas. If Sony falls any further is may become a good target for an acquisition.

Source: Reuters 

  • GG002

    Pushing PS4 more than you are capable of, just to boost some short-term numbers.. Way to dig your own grave, Sony.

    • PoohGQ

      It was always debatable if they were selling it at cost; would they be able to recoup the difference in software sales. I hardly think they will manage to break even in a year. It too MS more than 6 years t break even on the Xbox..

  • Tips_y

    So I guess this news dashes any hope for a Sony Windows Phone 8.1 in the foreseeable future or ever. What a pity. as a fan of WP I’m really disappointed.

    Another thing I take from the news: it seems Sony’s pricing for the PS4 is way too aggressive. I was actually hoping the good sales of the PS4 would lift Sony up from the drain. Seems like that’s not happening for at least another year. And in the tech world, one year is a long, long, long time. And I don’t see any hope coming from the sales of the Experia line either in light of the S5, the HTC One (M8), and the LG line-up.

    I wonder if Apple will end up buying Sony. After the Motorola fiasco, I can’t see Google buying Sony. Microsoft needs to first sort out the Nokia D&S acquisition before they think of buying another failing company. I don’t think the Japanese Government will allow Chinese OEMs to get hold of Sony. So that leaves Apple.

    • Bugbog

      I don’t think Japan allows full foreign ownership of domestic companies anyway.

  • PoohGQ

    For Chrissake, please remove the “$” sign in front of the 130B Yen. It is confusing cause you repeated twice. Sony is not even worth a quarter in market cap..

    • surilamin

      WordPress some how converted the yen symbol, I have removed them.

  • HighDefJunkies

    It’s ironic that PS4 success may sink them. If they are taking a lose on every console sold and won’t see profits for at least another year? No wonder all their developers are jumping ship.

    • Tips_y

      Yes quite ironic. And based on the unfolding drama, it seems stupid too how they did aggressive pricing just to achieve that success.

    • Jhora Zakaryan

      To make profit from PS4, they need to sell a one year PS+ subscriptions or one full price game to each customer. They’re quite good at selling subscriptions. I believe currently the bottleneck for them is the R&D for PS4 games. Most of their first party studios are busy working on new games, yet they need time to finish them and sell to customers.

    • koenshaku

      Starting to actually look like the Sega Dreamcast at this point.

  • Guest

    I hear Microsoft has a little bit of money in their cash reserves, maybe they’d be willing to take on this pending-charity case?

    • JamesSB

      Over 80 billion in cash

  • Andre-Omari John

    I saw this coming, ps4s obsession with graphical power will be its downfall. Microsoft are smarter :)

  • donzebe

    Sony might rescues itself by going all windows; the next big thing by 2015.