(By
Bob Blandeburgo )Sony Corp. (NYSE ADR:
SNE) is facing the first consecutive annual loss of its 63-year history.
The Tokyo-based company lost $1.1 billion (98.9 billion yen) last
year, and it expects to lose another $1.4 billion (120 billion yen) in
its fiscal year ending March 31. That would be Sony's first
back-to-back annual loss since the company went public in 1958.
And despite renewed optimism within its ranks, Sony still faces a
plethora of challenges, including a questionable direction,
cost-conscious consumers and a strengthening yen.
The onetime bellwether of the electronics industry has seen its
market share crumble in almost every category: Nintendo Co. Ltd.'s (OTC
ADR: NTDOY)
Wii game console has supplanted Sony's PlayStation brand, Sony has
given up its lead in portable media players to Apple Inc.'s (Nasdaq: AAPL) iPod, and Samsung Electronics Co. Ltd. is now the world's largest seller of televisions.
Hoping to turn the tide, Sony earlier this year underwent a major
restructuring with the goal of unifying its hardware, software and
entertainment businesses. The idea is to leverage its growing catalog
of networked products with the software and services its sells, such as
Internet-enabled televisions that enable consumers to watch Sony movies
through an online connection.
"Consumers want products that are networked, multi-functional and
service-enhanced utilizing open technologies, and user experiences that
are rich, shared and, increasingly, green," said Sony Chief Executive
Officer Howard Stringer. "[The restructuring] will now make it possible
for all of Sony's parts to work together to assume a position of
worldwide leadership and, together, achieve great things."
Doubts Cast Shadow Over Efforts
While analysts agree with Sony's loss estimate for this year, some
doubt its restructuring efforts – which included thousands of layoffs
and a streamlining of manufacturing in the – will truly pay off.
"They were hit fairly early by the downturn and have moved quicker
than some competitors to restructure, but it remains to be seen if
those moves will pay off," Hideyuki Ookoshi, who helps oversee $365
million at Chiba-Gin Asset Management in Tokyo, told Bloomberg News. "The problem with Sony is it doesn't know what it wants to be: Is it a game company, a consumer-electronics maker, a financial-services provider? There's no direction."
Operating income at Sony's financial services division was propelled
more than 57% by a boost in its life insurance revenue in the company's
fiscal first quarter ended June 30.
