Sony likely to post $1.1 bil operating loss
Global economic crisis cuts demand for electronicsNEW YORK -- Shares of Sony Corp. fell Tuesday after a Japanese media report said that the consumer electronics giant will post its first annual loss since 1995.
The global recession has hurt consumer spending, which in turn has hit most companies, including Sony's big electronics division. Fellow electronics maker Toshiba signaled Tuesday that it might have to reduce its earnings projections. Plus, a strong yen has also put strains on financial momentum of Japanese giants.
No wonder that investors bought into a report by Japan's Nikkei that said Sony would swing to an operating loss of about 100 billion yen ($1.1 billion) for the fiscal year through March 31. That compares to Sony guidance for a profit of $2.2 billion.
The company didn't do much to reassure investors. "Sony has made no announcement in this regard and at this time has no further comment," it said.
In Tokyo trading, Sony shares lost 8.9%, while in the U.S., American depository shares of Sony fell 3.7% to $22.24.
Investors now expect an update on or before Jan. 29, when Sony is scheduled to release its earnings report for its fiscal third quarter.
Observers also have speculated that Sony could use its earnings update to unveil further cost cuts. In December, it announced plans to cut 16,000 jobs worldwide in its electronics unit.