Sony Cuts Annual Forecast Amid Stalling Demand for TVs, Cameras

Sony Corp. (6758), Japan’s biggest

electronics exporter, unexpectedly cut its full-year profit

forecast amid plunging box-office receipts for its movies and

stalling demand for its televisions and digital cameras.

Net income will probably total 30 billion yen ($305 million)

in the year ending in March 2014, the Tokyo-based company said

in a statement today, cutting its August projection for 50

billion yen in profit. The new forecast compared with the 50.5

billion-yen average of 20 analyst estimates compiled by

Bloomberg. The company also posted a second-quarter loss.

Sony is struggling to catch Samsung Electronics Co. (005930) and

Apple Inc. in mobile devices while also combating worsening

demand for TVs, personal computers and camcorders, and weaker

emerging-market currencies. The company, which rejected Daniel Loeb’s push for a partial sale of its entertainment assets, is

recovering from a series of Hollywood box-office disappointments

that prompted criticism from the billionaire.

“Sony’s electronics businesses have been worsening on

weaker demand for many of its products,” said Koki Shiraishi,

an analyst at SMBC Nikko Securities Inc. in Tokyo. “The TV

market is mostly saturated while smartphones have eroded demand

for digital cameras, camcorders and game players.”

Targets Cut

The net loss totaled 19.3 billion yen in the three months

ended Sept. 30, wider than the 15.5 billion-yen loss booked a

year earlier, the Tokyo-based company said in a statement today.

That missed the 14.8 billion-yen average profit of five analyst

estimates compiled by Bloomberg.

The company cut its annual TV sales target to 14 million

units from 15 million projected three months ago. The smartphone

sales target was maintained at 42 million.

The company previously projected a second straight full-year profit after cutting 16,400 jobs and selling assets

including its 37-story Manhattan office building last year to

end a streak of four straight annual losses.

Sony is betting its Xperia Z1 handset, introduced in

September, will propel it to third place in the global

smartphone market, leaping from seventh and narrowing the gap

with Samsung and Apple. The phone features a 20.7-megapixel

camera and showcases Hirai’s strategy to boost internal

collaboration to make stronger products, the CEO said earlier

this month.

PlayStation Release

Sony is also introducing the PlayStation 4 in the U.S. from

Nov. 15, a week before Microsoft Corp.’s Xbox One hits shelves.

The Japanese company expects sales of the PS4, priced for

U.S. consumers at $399, to reach 5 million units by March 31,

compared with 3.55 million units sold in a similar period for

the PS3. Sony’s first new console in seven years will probably

outsell Xbox One, priced at $499, during the Christmas season

partly because of the sticker price, researcher IDC said.

In TVs, the company is promoting ultra-high-definition

Bravia sets after regaining the No. 3 position in the market.

Sony’s revenue share of the flat-panel TV market rose to 8

percent in the three months ended June 30 from 5.2 percent in

the previous quarter, overtaking China’s TCL Corp. (000100) and Sharp

Corp., according to DisplaySearch.

The company also is challenged by weaker emerging-market

currencies as sales in China and Brazil grew, Hirai said earlier

this month.

Hollywood Receipts

The yen strengthened more than 9 percent versus the Indian

rupee and 4.1 percent against the real in the six months ended

September. Sony generated 35 percent of its sales outside the

U.S., Europe and Japan during the June quarter.

In August, Tokyo-based Sony rebuffed an effort by investor

Daniel Loeb to sell part of the entertainment unit, while

promising more transparency into the unit’s earnings. The unit

created the TV show “Breaking Bad” and this month signed a

deal to produce a 13-episode thriller series for Netflix Inc. (NFLX)

Sony, which released “Cloudy With a Chance of Meatballs

2” and “Grown Ups 2” during the quarter, topped the global

box office with $1.24 billion in gross sales, according to data

compiled by Bloomberg. Still, that was lower than the $1.39

billion in ticket sales a year earlier, according to the data.

Marc Weinstock, head of marketing at Sony’s film studio,

was removed from his role following a disappointing run at the

box office, a person with knowledge of the matter said last

month. The departure was part of the film unit’s response to

investor concerns about its financial performance.

Loeb’s Third Point LLC built a 6.9 percent stake in Tokyo-based Sony and in a May 14 letter asked the Japanese electronics

maker to sell a portion of its entertainment business and

disclose more financial details from the unit.

Sony fell 1.7 percent to close at 1,877 yen in Tokyo

trading before the announcement. The stock is up 96 percent so

far this year, while Japan’s benchmark Topix index added 39

percent.

To contact the reporters on this story:

Mariko Yasu in Tokyo at

myasu@bloomberg.net;

Grace Huang in Tokyo at

xhuang66@bloomberg.net

To contact the editor responsible for this story:

Michael Tighe at

mtighe4@bloomberg.net

Enlarge image

Sony’s Showroom

Akio Kon/Bloomberg

The Sony Corp. logo is displayed outside the company’s showroom in Tokyo.

The Sony Corp. logo is displayed outside the company’s showroom in Tokyo. Photographer: Akio Kon/Bloomberg

Sony Cuts Annual Forecast Amid Stalling Demand for TVs, Cameras