In a sign of the times for the consumer electronics industry, Sony on Thursday posted its first annual loss in 14 years. It predicted a bleak year ahead.
Sony’s loss was 98.9 billion yen (US$1.03 billion) for its fiscal year just ended, and it expects a net loss of 120 billion yen (US$1.25 billion) for its fiscal year ending in March 2010. Despite the dismal report, Sony beat analyst’s expectations, thanks to a one-time gain from Japanese tax-law changes.
Sony blamed the economic downturn and a strong yen for its poor earnings and plans to close three factories in Japan to slash production costs. But analysts suggested the problem might be something more.
“Like Apple products, Sony products often carry a bit of a cache and are considered premium products,” said Michael Gartenberg, a vice president at Interpret. “The key difference is that Apple has managed to portray itself as a premium product that carries value. Sony hasn’t gone to the trouble to establish the value behind the premium offerings.”
Sony Fails to Respond
Drilling down into the report, Sony’s sales for fiscal 2009 fell 12.9 percent from the year-ago period to 7.73 trillion yen (US$80.8 billion). Sony saw the greatest losses in the fourth quarter, where sales plummeted 22 percent to 1.52 trillion yen (US$15.9 billion).
Sony has seen its market share eroded by rival consumer electronics and video-game console makers, including Apple and Nintendo. Once dominant with the Walkman brand, Sony has given up its portable music player market lead to Apple. For video-game consoles, Nintendo has regained its market share from Sony, with the Wii outselling the PlayStation 3 by a wide margin.
“The Wii has been a problem for the PS3 since almost day one, and Sony has not been able to effectively respond,” Gartenberg said. “Most recently, Apple has been pushing…