Sony posts first loss in 14 years

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Sony on Thursday registered a full-year loss of $1 billion for 2008, its first annual red ink in 14 years, and predicted even worse to come. Sony Pictures was a bright spot, even though operating income at the division fell by nearly half.

With full-year operating income of $305 million, the film unit managed to stay in the black thanks to a slate led by "Hancock," "Quantum of Solace" and "Paul Blart: Mall Cop." Film was the only one of Sony's four main businesses to be profitable for the fiscal year.

The profit drop for Sony Pictures chiefly was caused by reduced home entertainment sales — caused by a lack of blockbuster titles and the DVD sales market slump — and a one-time gain on the books last year in the form of the sale of a bankruptcy claim against Kirch Media.

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.

Increased advertising at those international channels, despite the recession, also boosted TV revenue for the year.

The annual loss at 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 PlayStation 3 sales were up about 10% to 10.1 million units, and sales of the PlayStation Portable edged up 2% to 14.1 million.

The conglomerate's electronics division was hit hard, 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."

Oneda also said Sony will take its cost-cutting measures a step further with additional plant closures and job cuts.

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 posted a $1.7 billion loss as revenue slid 22%, or 10% on a local currency basis, to $15.6 billion.

Gavin J. Blair reported from Tokyo; Georg Szalai reported from New York.
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