Sony slashes profit forecast on yen, electronics
TOKYO (Reuters) - SONY (JP6758.TK)Corp <6758.T> slashed its annual operating profit forecast by 57 percent to far below market expectations, citing a firmer yen and fierce price competition in the flat TV and digital camera markets.
The electronics and entertainment conglomerate earns more than three-quarters of its revenue overseas, making its earnings susceptible to any substantial foreign exchange moves.
Sony revised its assumed euro/yen exchange rate to 140 yen from 160 yen for the October-March second half. The new level, however, is still far from the actual rate of around 124.8 yen on Thursday, stoking investor worries about further outlook cuts.
The maker of Bravia flat TVs and Cyber-shot digital cameras now expects operating profit of 200 billion yen ($2 billion) for the year ending next March, down from its previous projection of 470 billion yen.
The latest figure is down 58 percent from a year earlier and compares with a consensus of 381.8 billion yen in a poll of 20 analysts by Reuters Estimates.
Sony changed its dollar/yen assumption for the second half of the business year to 100 yen from 105 yen.
"I'm a bit concerned about their new assumptions. There's a chance they may have to cut their outlook again," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
The yen traded at around 97.6 yen to the dollar on Thursday.
Sony lowered its full-year net profit forecast by 38 percent to 150 billion yen, and trimmed its sales outlook by 2 percent to 9 trillion yen.
Besides the yen's appreciation, Sony said the global economic slowdown is expected to hurt the profitability of its LCD TV, compact digital camera and camcorder operations.
Digital cameras and camcorders have been Sony's cash cow products.
Also, a sharp downturn in the Japanese stock market is hurting earnings at its financial unit, it said.
Prior to the announcement, shares in Sony, which competes with Samsung Electronics Co Ltd <005930.KS> and Panasonic Corp <6752.T> in flat TVs, closed down 6.3 percent at 2,295 yen, underperforming the Tokyo stock market's electrical machinery index , fell 4.1 percent.
Sony's chief financial officer Nobuyuki Oneda is set to speak to a news conference on the earnings revision at 5:30 p.m. (0830 GMT).
($1=97.40 Yen)
(Additional reporting by Taiga Uranaka and Sachi Izumi; Editing by Michael Watson)