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Spider-Man, James Bond can't rescue beleaguered Sony

Bloomberg News

December 23. 2012 7:09PM
In "Skyfall," actor Daniel Craig's 007 character uses Sony's Xperia T smartphone. (Francois Duhamel/Washington Post)

TOKYO - Even James Bond and Spider-Man can't rescue Sony, the beleaguered Japanese electronics maker.

In "Skyfall," actor Daniel Craig's 007 uses Sony's Xperia T smartphone, while Andrew Garfield's title character in "The Amazing Spider-Man" wields an Xperia X10 Mini Pro. The two movies, released by Sony this year, have grossed more than $1.7 billion combined, compared with the company's $10 billion in total losses during the past four fiscal years.

Such blockbuster promotion notwithstanding, Sony says sales of its Bravia TVs, Cyber-shot cameras, PlayStation game consoles and Handycam video recorders may drop this fiscal year. Hammered by declining TV demand, Sony, Panasonic and Sharp fell to 30-year lows in Tokyo trading this year after record fiscal-year losses totaling 1.6 trillion yen ($19 billion).

"It doesn't look like a big product that can change the landscape for the Japanese electronics makers is arriving any time soon," said Masahiro Ono, an analyst at Morgan Stanley MUFG Securities in Tokyo. "Their tasks will remain the same as this year: cutting costs and promoting reform."

Once symbols of Japan's global dominance in consumer electronics, Sony, Panasonic and Sharp were among the nation's worst-performing companies in 2012. Overtaken in market share by overseas rivals including South Korea's Samsung Electronics, the trio lost $15 billion in combined market capitalization this year amid declining sales and a strong yen.

A comeback in 2013 may depend on whether the Japanese companies can take strong measures including shedding some businesses, said Kota Ezawa, an analyst at Citigroup in Tokyo. Sony, Sharp and Panasonic are eliminating more than 29,000 jobs, closing plants and selling assets to restore profit after failing to come up with hit products to challenge Apple and Samsung's mobile devices.

"Sony and Panasonic still have the chance to keep their pride," Ezawa said. "They may have a sense of urgency that they need to change, but their business strategies aren't showing that."

Sony, which invented the Walkman music player in 1979 and introduced the first CD player, has posted four straight full-year net losses. The Tokyo-based company is headed for a ninth year of losses from TVs after losing market share to Samsung, the world's largest maker of TVs and smartphones.

Targeting a 20 billion-yen profit this fiscal year, Sony fell to a 32-year low of 789 yen in Tokyo trading on Dec. 5 and has dropped 32 percent this year, the sixth-worst performer in Japan's benchmark Nikkei 225 Stock Average, which has gained 20 percent.

Shares of Panasonic, which posted a 772 billion-yen net loss last fiscal year, have dropped 23 percent. The company is projecting a 765 billion-yen loss in the year ending March 31.

Sharp, which posted a 376 billion-yen net loss last fiscal year, said Nov. 1 this year's loss may widen to 450 billion yen and added there was "material doubt" about the company's ability to survive.

Japan's largest maker of liquid-crystal-display panels pledged its Osaka headquarters as collateral to secure support from lenders after its credit rating was cut to junk. Sharp hemorrhaged 103 billion yen in cash from operations in the fiscal first half and had 511 billion yen in debt due within a year as of Sept. 30, according to data compiled by Bloomberg.

Sharp reached an agreement this month to sell as much as 9.9 billion yen of shares to San Diego-based Qualcomm as the Japanese company works to restore its balance sheet. It has set a March deadline for concluding negotiations for a possible investment from Taiwan's Foxconn Technology Group.

At Sony, Chief Executive Officer Kazuo Hirai is counting on boosting sales of Xperia phones and turning around the TV-making unit. In April, he identified mobile devices as a key priority.

After spending 1.05 billion euros ($1.3 billion) to buy out its mobile-phone venture with Ericsson AB, Sony plans to boost smartphone sales 51 percent to 34 million units in the year ending March 31. Smartphones will probably surpass personal computers to become the top consumer-electronics segment by revenue in 2012 and may jump 35 percent to $348 billion in 2013, Citigroup said in a Dec. 3 report.

Sony, which sold 8.8 million smartphones in the quarter ended Sept. 30, is speeding up development of new models and working to integrate its technology from other areas into the mobile-phone business, said Yu Tominaga, a spokesman. He declined to discuss new products planned in 2013. The company maintained its full-year target of 34 million in sales even while cutting estimates for compact cameras, PCs, TVs and handheld game players.

"Everyone agrees that smartphones are an important business for Sony next year," Citigroup's Ezawa said. "It's hard to tell whether the company can deliver a product that will surprise anyone."

This year, the company introduced more than 20 new smartphone models, Tominaga said.

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