Sony to stay in red after posting $1.26bn loss

Sony on Wednesday warned it would remain in the red for another year after it booked a $1.26 billion annual loss, blaming costs tied to its exit from the personal computer business. The struggling Japanese electronics giant is undergoing a painful restructuring and its woeful bottom-line results come a day after it said it would not pay bonuses to senior executives for the third straight year. Moody's downgraded its credit rating on the firm to junk in January. Sony posted a full-year net loss of 128.37 billion yen ($1.26 billion) on Wednesday and expects to lose 50 billion yen in the current fiscal year to March 2015, despite seeing losses narrow in its hard-hit television business. Revenue rose 14.3 percent to 7.76 trillion yen owing to a weak yen, record sales for the new PlayStation 4 games console and strong smartphone sales, it said. But investors were shocked this month as Sony warned it would lose more than the 110 billion yen shortfall it had forecast just three months ago, when it announced 5,000 job cuts to its struggling computer and television units. Sony President Kazuo Hirai has led a sweeping restructuring, including liquidating assets that saw the $1.0 billion sale of the firm's Manhattan headquarters. Last week, Sony said it would shutter its ebook Reader Store in Europe and Australia following a similar pullout in North America. It is also selling properties at a prestigious Tokyo site where Sony had its headquarters for six decades. Hirai has repeatedly shrugged off pleas to abandon the still ailing television unit, which he insists remains central to Sony's core business. Japanese manufacturers have suffered badly in their TV divisions as razor-thin margins and fierce overseas competition weigh on profits. However, Sony's earnings have trailed struggling domestic rivals Panasonic and Sharp, both of which have reported profits following on from record losses as they overhaul their vast businesses. "Sony is getting out of its restructuring phase, but compared with Panasonic, its operating profit forecast for the year to March 2015 is not very impressive," said Hideyuki Suzuki, general manager of investment market research department at SBI Securities in Tokyo. - Still struggling - Sony was once king of consumer electronics and a byword for cool. But the company that revolutionised the way people listen to music with its Walkman portable cassette player has lost its footing since the sure-fire successes of the 1980s, and been overtaken by nimbler foreign competitors like Apple and Samsung. The electronics that built the brand are now an albatross around its neck, weighing on the profits that other arms of the huge company generate, such as those in music publishing and a movie division that includes a Hollywood studio. A little-known insurance business also makes money. Sony has seen buoyant sales of its Xperia smartphone and record demand for the PlayStation 4 console. It has sold more than seven million since its late 2013 launch. But even its stronger divisions have faced challenges. The PS4 is up against Microsoft's Xbox One, and Nintendo's Wii U for dominance of the digital home entertainment market at a time when consoles face stiff competition from cheap -- or sometimes free -- games for tablets and smartphones. The cost of the PS4 launch put its games division into an operating loss, Sony said, and the movie business has also seen sales drop over the past year. "Sales for Motion Pictures decreased significantly year-on-year due to lower theatrical and home entertainment revenues as the previous fiscal year benefitted from the strong performances of Skyfall, The Amazing Spider-Man and Men in Black 3," Sony said in a statement. Sony has announced the sale of its Vaio-brand PC division as it plans to concentrate on its line-up of smartphones and tablets. After suffering four years of losses, Sony crept back into the black in the previous fiscal year -- although that was mostly due to asset sales and a weak yen which inflated repatriated profits from business overseas. Sony shares rose 1.06 percent to 1,805 yen in Tokyo, with the earnings announcement made after markets had closed.