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Sony More Than Doubles Net Loss Estimate To $6.4 Bln On Tax Charge

Sony More Than Doubles Net Loss Estimate To $6.4 Bln On Tax Charge
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Sony Corp. (SNE: Quote), which is going through the worst phase in its history, again widened its net loss forecast for the year 2012 as it takes a tax charge. However, it expects to return to positive operating results in the next year on foreign exchange impact, the Japanese consumer electronics and entertainment firm said in a statement on Tuesday.

The company, which was already expecting losses for the fourth straight year, now sees a record 520 billion yen or about $6.41 billion net loss in the year. This is significantly greater than the February forecast of 220 billion yen loss and last year's reported net loss of 259.6 billion yen.

Sony now expects to record an aggregate additional charge of about 300 billion yen in tax expense in the fourth quarter, primarily due to the establishment of valuation allowances against certain deferred tax assets, predominantly in the U.S. Sony also expects to record additional tax expense due to the increased possibility that profits will be reallocated between Japan and certain of Sony's overseas subsidiaries.

The year ended March 31 was also marred by losses at affiliated companies, mainly S-LCD and Sony Ericsson, production cuts caused by last year's Thailand floods and earthquake and tsunami, a stronger yen, as well as the cost of exiting a display-panel venture with Samsung.

Amid intensifying competition, Sony in February had more than doubled its annual loss forecast from a November forecast of 90 billion yen, due largely to the slump at its core TV business.

However, the company today maintained that it expects annual consolidated sales to be 6.40 trillion yen, 11 percent lower than prior year's 7.18 trillion yen. Operating loss is still expected to be 95 billion yen, in comparison to prior year's operating profit of 199.8 billion yen.

Further ahead, for the fiscal year starting April 1, Sony currently expects consolidated income to be approximately 180 billion yen. Sony said it will provide consolidated results forecast for the fiscal year ending March 31, 2013 while announcing annual results on May 10.

The company, which has been restructuring its businesses and management as well as selling non-core operations amid its turnaround efforts, recently had said that the changes "are intended to drive revitalization and growth across Sony's core electronics businesses, and deliver compelling user experiences through convergence of the unique assets in place throughout the Sony Group."

On Monday, the Nikkei reported that Sony plans to slash a total of 10,000 jobs worldwide and the firm is likely to complete the reduction, affecting about 6 percent of its workforce, by the end of this year.

Sony shares closed Today's trading at 1,586 yen in Japan, down 58 yen or 3.53 percent.

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by RTT Staff Writer

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