Sony Stock Tumbles after Forecasting Annual Loss

By: AP
By: AP

TOKYO – Shares of Sony Corp. tumbled to their lowest level in a month Friday after the Japanese electronics giant forecast its first annual loss in 14 years.

The sell-off sent Sony down 7 percent to 1,802 yen on the Tokyo Stock Exchange — the worst performance since Dec. 24 when the issue hit 1,798 yen. In comparison, the benchmark Nikkei 225 index was down 3.8 percent.

Battered by slumping sales and a strong yen, Sony shares lost 70 percent of their value in 2008.

The company said it expects to sink to a 150 billion yen ($1.7 billion) net loss for the fiscal year through March, a reversal from 369.4 billion yen profit the previous year.

At a hastily called news conference at its Tokyo headquarters Thursday, Sony Chief Executive Howard Stringer acknowledged he had not gone far enough with cost cuts and efforts to combine entertainment with electronics.

Sony said it will offer early retirement to employees at its prized TV division, seeking to trim personnel costs there by 30 percent. It is also slashing jobs at its movies, music and game businesses. Sony did not give a head count target for the reductions. It said it is cutting 1,000 temporary workers when it closes one of two TV plants in Japan.

Stringer said he and two other top executives, including President Ryoji Chubachi, will give up their entire bonus, which would halve their annual pay, according to Sony. Other executives and managers will see lower pay.

Goldman Sachs maintained its "neutral" rating on the Sony's stock Friday and said the shares could start heading higher if investors see clear signs of reform.

"We think Sony needs to show progress with concrete measures to prompt a genuine share price recover, and we expect this to take some time," Goldman Sachs said in a report. "Still, it is already preparing to bounce back with inventory cuts and additional restructuring, and we think the stock has reached a major bottom."


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