Tags: Sony | SNE | consumer electronics | stocks

Once a Leader, Sony Losing Momentum

By    |   Wednesday, 28 Sep 2011 04:11 PM

Sony (SNE) stands as Japan’s largest consumer electronics exporter. But given all the company’s missteps, that title might not last much longer. The company has registered three straight years of financial losses without a hit product.

Not all of the woes are Sony’s fault. The March earthquake and tsunami hit it hard; half of Sony manufacturing is based in Japan. In its latest estimates, the company forecast Bravia TV sales will total 22 million units this fiscal year ending March 31, down from its previous forecast of 27 million.

The TV unit lost $978 million in the year ended March 31, and Sony said it may lose a similar amount this fiscal year. Some analysts say Sony, whose Trinitron was the must-have TV in the 1970s and 1980s, should consider exiting the business.

One major problem for Sony is that it puts too much focus on hardware and not enough on the software. User interface — the primary concern at Apple — seems to be an afterthought at Sony. For instance, the company started the portable music business with its Walkman in 1979. But now it has been eclipsed by Apple’s iPod. The Walkman was phased out last year.

The PlayStation gaming console has been one of the company’s most successful products. But it was hit by hackers earlier this year, sending the network offline for about two months. Personal data from tens of millions of user accounts was released.

Sagging earnings

Sony also suffers from the strong yen, which limits its exports. In Sony’s fiscal first quarter, ended June 30, it suffered a loss of $196 million, reversing a profit from a year earlier. Revenue dropped 10 percent to $19.4 billion.

Standard & Poor’s analyst Michael Souers has a hold rating on Sony shares.

“We think widespread consumer malaise, partially caused by tighter credit restrictions imposed on potential customers, will continue well into fiscal 2012,” he writes. “We forecast a slight decrease in sales for LCD TVs in fiscal 2012 and think this product will remain unprofitable.” The company next reports around Oct. 27.

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Sony (SNE) stands as Japan s largest consumer electronics exporter. But given all the company s missteps, that title might not last much longer. The company has registered three straight years of financial losses without a hit product. Not all of the woes are Sony s fault....
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2011-11-28
Wednesday, 28 Sep 2011 04:11 PM
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