Japan’s Sony more than doubles net loss forecast

Japanese tech giant Sony more than doubled its full-year net loss forecast to $2.9 billion yesterday, as outgoing president and CEO Howard Stringer admitted making errors but sought to defend his legacy.

The firm said it was expecting a net loss of 220 billion yen ($2.9 billion) for the year to March, up from 90 billion yen previously, in what will be its fourth consecutive year in the red.

Sony blamed difficult trading conditions in developed-country markets, the impact of severe flooding in Thailand, and the high yen among the causes of the revision.

Mr Stringer’s tenure has seen Sony assailed on multiple fronts, with mobile phones challenging its key games division – which suffered an embarrassing hacking scandal – huge losses in the firm’s television business, and piracy threatening its music and film assets.

Last year, the Tokyo-based maker of PlayStation consoles and Bravia televisions lost 259.6 billion yen.

Sony announced that Mr Stringer would be stepping aside as president and CEO, to be replaced by his protégé Kazuo Hirai, who at 51 becomes one of the youngest CEOs of a Nikkei 225 company.

Mr Stringer, a Welsh-born American who became the firm’s first foreign head when he took over in 2005, said that Sony’s travails were the result of external events, among them Japan’s earthquake and tsunami in March last year.

“There is no question 2011 was one of the most trying periods in Sony history. Certainly mine,” he told reporters in Tokyo.

“There can be no denying that, were it not for all these natural and unnatural events, we would be sitting here revealing black ink, not red. The worst is nearly over. Keep in mind just how much this has been results of disasters inflicted on us, not by us.”

But he added: “It is not to say that we did not make mistakes. We have. Hopefully we have learned from all of them”.

Sitting alongside Mr Stringer, Mr Hirai – reportedly a former translator for bands including Beastie Boys and Journey – said the Japanese electronics industry was “in crisis”.

“I have a sense of urgency as the environment in which we operate is extremely tough,” he said, adding nothing would be ruled out in his efforts to reform the company, including withdrawing from some businesses.

“This may come with painful decisions and choices,” he said. “Our competitors and the business environment do not wait for us.”

Sony has been linked to a tie-up with scandal-hit camera and medical equipment maker Olympus, and Mr Hirai said the latter sector would be key to turning around his company.

Mr Stringer closed his address saying: “As I look back on the past seven years, despite frustrations and setbacks along the way, I am proud of the reforms we have made and victories we achieved”.

But Seiichi Suzuki, analyst at Tokai Tokyo Securities, said: “I assume Sony’s earnings were so bad that Mr Stringer was forced to step aside”.