Sony forecasts $2.9 billion annual loss

By Steve Watts, Feb 02, 2012 9:00am PST

Sony is forecasting a $2.9 billion annual loss, despite rising PlayStation 3 sales. The corporation suffered a $2.1 billion net loss between October and December alone, attributed to the strong yen, the economy, and a flood in Thailand that disrupted its television supply chain. It posted a revenue of $24 billion, down 17.4% year-over-year.

The consumer products and services division, of which PlayStation is one part, reported an operating loss of $1.1 billion. The PlayStation 3 sold 6.5 million units, an increase of 2.8 million over the previous quarter and 200,000 from the same period last year.

PS2 and PSP dropped in sales steadily, while hardware sales fell to 11.4 million, from 16.5 million during the same period last year. Sony attributes the losses to the PlayStation 3 price cut and marketing costs.

The company's overall forecast, announced in its latest earnings, is almost double the expected loss. The company reported a quarterly loss of $1.2 billion.

This is all coming to a head just as Kaz Hirai prepares to step in as president of the company in April. Hirai hails from the fairly successful products and services division, having spearheaded many PlayStation initiatives over the last several years.

"I have a very strong sense of crisis about the environment surrounding us," Hirai said according to a Reuters report. "We cannot be afraid to make painful choices for the future of Sony. Our rivals and the operating environment won't wait for us." Hirai has indicated his plans include converging some of its various business arms and leaning more on its TV sales.

Analysts say the road ahead won't be easy for Sony. "It's got structural problems that will take years to fix," said analyst Kim Young-Chan. "It's not just Sony, but Japanese IT firms have similar problems. They are failing to innovate and produce industry-leading products in almost every major area - from TVs to displays, tablets and smartphones." Another analyst, Hisashi Kuroda, says the company will need to make "radical reforms" to make profits again.

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