Sony posts '08 loss, expects worse in '09
Global recession batters demand for consumer electronicsSony's film division was something of a bright spot Thursday as the conglomerate said it swung to a full-year loss of $1 billion for 2008 -- its first annual loss in 14 years -- and predicted even worse to come this year. Battered by a strong yen and bruised by the global downturn, Sony reported a 12.9% revenue drop for the year to $78.9 billion.
For the fiscal fourth quarter, Sony swung to a $1.7 billion loss. Revenue fell 22%, or 10% on a local currency basis, to $15.6 billion. Quarterly operating profit dropped 60.6% in the film division to $145 million, and the games unit loss more than doubled to $253 million. Fourth-quarter film unit revenue fell 12.4%, and games revenue was down 38.7%.
While full-year operating income at Sony Pictures fell by nearly half to $305 million, it managed to avoid the red ink staining almost every other division on a strong slate led by "Hancock," "Quantum of Solace" and "Paul Blart: Mall Cop." Increased advertising at a number of international channels despite the recession also boosted TV revenue for the year. The profit drop in the Pictures division was chiefly caused by reduced home entertainment sales -- due to a lack of blockbuster titles and a general DVD sales market slump -- and a one-time gain in the form of the sale of a bankruptcy claim against KirchMedia in last year's figures.
The annual loss in Sony's video games division narrowed to 58.5 billion yen ($597 million), from last year's 124.5 billion yen, on an 18% revenue decline to 1.05 trillion yen ($10.75 billion).
Worldwide sales of the PlayStation 3 (PS 3) were up around 10% to 10.06 million units; while sales of the PlayStation Portable (PSP) crept up 2% to 14.11 million. The PS 3 even managed to outsell the Wii in Japan for the final weeks of Sony's fiscal year, ending March 31.
The conglomerate's electronics division was hardest hit, registering an operating loss of 168 billion yen ($1.72 billion), compared with a profit of 441 billion yen last year.
While forecasting a group loss for the recently started fiscal year to widen to 120 billion yen ($1.25 billion) on a 6% revenue decline, CFO Nobuyuki Oneda predicted "a tough full year." He added: "But we expect to start seeing some bright lights in the second half."
The CFO also said Sony will take its cost cutting measures a step further with additional plant closures and job cuts.
The film unit will see higher revenue and operating profit in the new fiscal year thanks to a higher number of major releases along with increased ad and subscription revenue from its international channels, Sony said.
While the PS 3 business will boost its bottom line in the new year, Sony forecast continued losses in its games division and a revenue decline "due to the negative impact from the appreciation of the yen and a decrease in sales for the PS 2 business."
Gavin J. Blair reported from Tokyo. Georg Szalai reported from New York.