Sony Predicts $3.2 Billion Fiscal-Year Loss After Earthquake
The company revised its forecast from a profit to its third annual loss in a row amid a provision for deferred tax assets and said costs for the recent PlayStation Network security breach will cost it $171.5 million this fiscal year.
TOKYO – With an uncertain domestic economic outlook following the March natural disaster, Sony revised its financial forecast for the year ended in March, predicting a loss of 260 billion yen ($3.2 billion) on Monday. It would mark the third straight annual loss for the company.
The forecast was downgraded from a previously targeted profit of 70 billion yen due to a tax writedown on accumulated losses. The losses can be written down against future profits, but with the damage to the supply chain and other factors resulting from the earthquake and tsunami expected to cost Sony 150 billion yen ($1.83 billion), the company said it has decided to take a “non-cash charge of approximately 360 billion yen related to Japanese tax credits.”
However, Sony left its forecast for an annual operating profit unchanged at 200 billion yen ($2.4 billion).
The announcement of the predicted loss comes just days before Sony, led by chairman and CEO Howard Stringer, issues its delayed full fiscal year results on Thursday.
Costs of the hacking of the PlayStation Network are estimated to total 14 billion yen ($171.5 million) in the recently started financial year ending March 2012.
Various Sony websites around the world have suffered a total of eight security breaches over the last couple of months, the most serious being the hacking of the PlayStation Network which also resulted in it being offline for weeks.
“These costs include a loss of income due to the network being down. We haven’t yet received information about misuse of personal information but this estimate includes insurance against possible misuses,” said CFO Masaru Kato, while admitting that significant credit card fraud using stolen data could considerably raise costs.