Sony halves profit forecast on yen, electronics
TOKYO (Reuters) - Sony Corp <6758.T> slashed its annual operating profit forecast by 57 percent to far below market expectations, citing a firmer yen and tough price competition in the flat TV and digital camera markets.
The electronics and entertainment conglomerate generates more than three-quarters of its revenue overseas, and the recent surge in the yen against both the euro and the dollar has been slicing into its profits.
But the currency is not the only problem. Sony also warned that the global economic slowdown and fierce price competition would hit profitability on its Bravia LCD TVs, Cyber-shot digital cameras and handheld video cameras.
Analysts and investors were already talking about the chances of another revision later this year given that Sony's revised euro/yen rate of 140 yen for the October-March second half is still far from the current level of around 125 yen.
Sony acknowledged that its operating profit would fall another 80-90 billion yen if current rates were applied.
"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.
Sony cut its operating profit forecast for the year to next March to 200 billion yen ($2 billion) from 470 billion yen. The new target is well short of the market consensus of 381.8 billion yen in a poll of 20 analysts by Reuters Estimates.
On a net basis, Sony lowered its full-year forecast by 38 percent to 150 billion yen, and trimmed its sales outlook by 2 percent to 9 trillion yen.
Sony changed its dollar/yen assumption for the second half of the business year to 100 yen from 105 yen, compared to the current level around 98 yen. It lowered its euro/yen rate to 140 yen from 160 yen.
The company cut its annual LCD TV sales forecast by 1 million units to 16 million, and said that it would be difficult to turn its TV and video game operations profitable this financial year.
A sharp downturn in the Japanese stock market has hit profits at its financial unit, which holds stocks and bonds.
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.
($1=97.40 Yen)
(Additional reporting by Taiga Uranaka and Sachi Izumi; Editing by Hugh Lawson)