Sony braced for $2.9 billion loss

 

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By Stuart Turton

Posted on 22 Jan 2009 at 15:30

Sony is bracing itself for record losses of $2.9 billion, as the company's chief executive hit out at his colleagues for not sharing his "sense of urgency" over the need to restructure.

The operating loss will be the company's first for 14 years and easily surpasses the worst fears of analysts, who had been predicting losses closer to $1.1 billion.

The figure will doubly galling for Sony, which had forecast profits of 150 billion yen for the financial year ending March, but now must face up to 150 billion yen net losses. The loss is the second largest in the company's history.

"The massive economic upheaval being experienced across the globe is sparing no one in the consumer electronics world," Sony chief executive Howard Stringer told reporters. "We must now embrace many difficult decisions in order to deal with this new reality immediately."

However, Stringer remained defiant, telling reporters: "It's my responsibility to change Sony and bring it back to its former profitability, and it's my foremost priority. We have to move in a hurry."

Sony has already announced plans to axe 16,000 jobs and close manufacturing plants. Along with new plans to offer employees early retirement and the slashing of executive salaries by up to 50%, Stringer claims the company will save 250 billion yen in its next fiscal year.

The manufacturer says it is looking at an initial restructuring outlay of around 110 billion yen over the next twelve months starting 1 April.

Stringer suggested the massive losses may spur his colleagues into action, claiming they have yet to develop his "sense of urgency" over the need to restructure: "There is still a lot of the old Sony, and not enough of the new, which constrains our competitiveness. We simply have no alternative but to dramatically change the way we do things. Without those changes it will be very difficult to return to profitability."