Sony revised its forecast for the fiscal year that ended March 31. It is a late revision since the year ended over a month ago. As part of the announcement, Sony management said operating income would be down to 26 billion yen (which Reuters calculates as $254 million) from the 80 billion yen forecast it made in February — about two-thirds
The primary reasons for the change:
Sony expects to record approximately 30 billion yen in additional expenses in the fiscal year ended March 31, 2014 related to exiting the PC business.
And:
Sony expects to record approximately 25 billion yen in impairment charges mainly related to its overseas disc manufacturing business.
Among the other things Sony management will be blamed for is that it came to these conclusions so late.
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What Sony management did not say is good. Its troubled consumer electronics business, which includes TVs and cameras, has not fallen apart further. Its console business, the flagship of which is the new PS4, must be doing well. Sony recently said it had already shipped seven million PS4 models. It was introduced just last November. Sony did not say the profits of its film studio had eroded. Almost a year ago, Daniel Loeb of hedge fund Third Point tried to get Sony to spin off its entertainment group. His argument was that movie making has nothing to do with consumer electronics. Sony management stonewalled him, and it worked.
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Sony has gotten to the juncture where whether or not it owns a studio, whether or not it dumped its PC or smartphone business, is no longer the primary concern. What is the real issue is whether management has lost control of the company, to the extent that Hirai does not know what is going on enough to effectively run Sony. The evidence is that he does not know. Sony’s board is faced with the question of whether the company is so complex and broken that anyone can.
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