Sony continues to struggle with more losses and restructuring

I remember with fond memories during my youth of the Sony Walkman and Trinitron TV sets as the gold standard in the audio visual sphere. Now Sony seems to be in tatters, announcing an expected $2.14 billion loss for the year ending March 2015 after years of restructuring. The loss is nearly five times what investors previously expected and comes after Moody’s down graded its debt to junk in January.  In addition, Sony announced that it would stop paying the dividend for the first time since 1958. The latest loss makes it the sixth year out of seven and since 2009 Sony’s shares have dropped 24%

The extraordinary loss comes after Sony said it needed to make an impairment charge of 180 billion Yen due to a restructuring of its mobile phone business. This comes after it spun off its TV division and divested its PC business making it increasingly focused on its gaming, smart phones, music and cameras, with the PlayStation 4 and high end phones critical to the company’s near term future.

The Chief Executive, Kazuo Hirai has had to issue three profit warnings since late 2013 and the pressure is on its mobile division with strong competition from Samsung and Apple, particularly with the recently announced iPhone 6 range having record levels of pre-orders.

After years of promises of a turnaround in Sony’s fortunes it seems an uphill battle for the Japanese company. Talk of a rebirth under new management seems to have done little for the company’s beleaguered shareholders. After so much innovation in the 1970’s and 1980’s, Sony has been unable to keep up with companies like Samsung in the consumer electronics market. The company is apparently plagued by entrenched cultural issues making the break throughs in innovation increasingly hard to come by as the consumer becomes ever more demanding. Like Nokia, Sony seems to have lost its way.

Contrarian Investor UK

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