Tokyo: Sony and Sharp's third straight quarters of losses underscore the challenges they face in flat TV market as they struggle to compete with Samsung Electronics and other South Korean rivals benefiting from a weaker won.
Nintendo reported a sharp fall in quarterly profit as sales of its Wii game console lost some steam and the stronger yen took a toll. It reiterated its forecast for profit to fall for the first time in four years.
Sony, which vies with Panasonic Corp for the position as the world's largest consumer electronics maker, is struggling to keep up with Samsung in LCD TVs and has been outmatched by Nintendo in video games.
In the portable music player market, which Sony created 30 years ago with the Walkman, it trails Apple's iPod, while its cellphone venture with Ericsson has been mired in the red.
Sony yesterday said it believes it is necessary to extend some form of financial support to the struggling joint venture.
"Sony is making changes to adapt to the environment but it still seems to be having trouble keeping up and perhaps should have been a bit more aggressive about cost-cutting," Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management, said.
The maker of Bravia LCD TVs and Cyber-shot digital cameras is restructuring its empire, which includes a movie studio and an insurance arm. It has announced plans to close eight manufacturing sites, halve its suppliers and cut 16,000 jobs.
To help bolster its loss-making TV operations, Sony said on Thursday it would spend about 68 billion yen (Dh2.62 billion) by April 2011 to take a one-third stake in a joint venture with Sharp to jointly produce and sell cost-competitive LCD panels.
"Sony's Bravia has been struggling since last year. Korean rivals caught up in terms of product quality and are now eating away at the market with price competitiveness," Park Hyun, analyst at Prudential Investment & Securities in Seoul, said. "Even taking into account the impact of the stronger yen, it appears Sony is lagging Korean peers in overall competitiveness."
Sony earns three quarters of its revenues overseas, making it vulnerable to the yen's appreciation, which makes Japanese exports less price competitive overseas at a time when South Korean peers are benefiting from a softer won.
Sony's operating loss came in at 25.7 billion yen in April-June, down from a profit of 73.44 billion a year earlier, and smaller than the average 103.1 billion yen loss forecast by five analysts.
In contrast, LG Electronics last week posted a record quarterly profit on strong TV and mobile phone sales, while Samsung beat market expectations and posted a 5 percent gain in quarterly net profit.
Sony kept its operating loss forecast of 110 billion yen for the year to March 31, 2010 even though its operating loss for the latest quarter was more than 100 billion yen smaller than it had originally projected.
The forecast is about half the loss it racked up a year ago, and compares with the consensus of 117.7 billion yen loss in a Reuters poll of 19 analysts.
But losses on flat TVs had narrowed in the latest quarter, bringing the business closer to being profitable, and it was now confident enough to set an internal target to break even as a company on an operating basis.
