COMMENT: Back in 1997 when Apple was facing the real possibility of Chapter 11 bankruptcy, Sony was the high flying kid on the block. Sony Trinitron TVs were popular, as was their portable music player, the Walkman.Now it is Sony that is facing an uncertain future after overnight reports reveal they doubled their losses to $2.09 billion. The Company has also said that there is even worse to come, as consumers choose products other than a Sony.
Things are so bad in Australia that Sony has resorted to blocking staff from getting access to news services that report the problems they’re facing. Some analysts claim that Sony could become another Kodak who last week filed for Chapter 11 bankruptcy protection.
They have also been forced to recall 70,000 of their Bravia TVs in Australia which are now made by third party manufacturers due to the risk of them bursting into flames. More than 1.6 million Sony Bravia TVs have been recalled worldwide.
In contrast Apple last week reported sales of $86 Billion for the quarter and profits of $13 Billion, with their reserves thriving at almost $95 Billion.
Prior to the flat panel TV era, CRT television sets was once the cornerstone of a thriving Sony electronics business.
But as vendors like Samsung, Sony and Panasonic rolled out their new $20,000 flat panel TVs Sony stuck to selling their CRT models and when they did move to flat panel TV models, they invested in plasma at a time when the likes of Samsung and LG were moving to cheaper LCD models.
Sony’s inability to deliver what consumers want has resulted in seven straight years of losses for its TV business. With the company’s history so rooted in television sets, executives have been unwilling to take a step back. But as Kazuo Hirai, the new CEO of Sony declared three months ago, Sony would no longer pursue a long-term goal of selling 40 million television sets a year and told the television group he was cutting their sales goals in half.
Mr. Hirai told the Wall Street Journal that Sony would “build only what [it] could sell” and televisions would lose about $2.3 billion, in the fiscal year ending in March. The losses would be halved in the following fiscal year before returning to profits in the year ending March 2014, he said.
The move has upset Sony’s font line sales staff who claims that they need a competitive TV offering if they are to sell home theatre kits and other Sony electronics gear.
At the recent CES in Las Vegas show Sony failed to reveal a new Bravia TV line up, instead they rolled out a TV prototype which could take 12 months to deliver to market. In contrast Panasonic, LG and Samsung launched several new TV models including Smart TVs and OLED models.
On Wednesday Sony dumped their CEO Sir Howard Stringer: a man who has spent his tenure at Sony cutting costs, sacking tens of thousands of staff while struggling to invent a hot new product.
TV and Playstation sales are falling and consumers are not buying Sony branded tablets or Sony Ericsson branded smartphones.
Even Sony’s compact digital cameras are proving unpopular with the Company admitting on Monday that sales had fallen 20% during the past six months.
Kazuo Hirai, the new CEO of Sony, admitted earlier this week that things are looking pretty bad. The company has blamed a stronger yen, cuts in production caused by last year’s Thailand floods and the cost of exiting a display-panel venture with Samsung Electronics Co for their losses which will be the fourth in a row, and the first since the Tokyo-based company was listed in 1958.
Sony, who has cut sales targets for cameras, personal computers and PlayStation 3 game consoles, said its mobile-phone unit performed worse than expected.
In Australia Sony directors chose to black ban SmartHouse in an effort to stop us reporting on the Companies problems.
They did not like the fact that we exposed how the Japanese Company was price gouging Australian customers with Sony products priced up to 60% more than what the same products were being sold for in Sony stores overseas.
Now Sony faces the real threat of either being acquired or simply failing. Some analysts claim that Sony should get out of the consumer electronics business altogether.
Last night Sony announced that they have cut its sales target for cameras to 21 million units from 23 million and reduced its forecast for personal-computer sales to 8.4 million from 9.4 million. Camcorder and Blu-ray disc sales also should be lower than projected, the company said.
They have also cut sales targets for the PlayStation 3 to 14 million units from 15 million. Hirai said recently the PlayStation 3 would have a 10-year lifespan, suggesting the five-year-old player will not be replaced soon.
Edwin Merner, president of Atlantis Investment Research in Tokyo said last night: “Sony is a very weak company. To turn around at this time will be very, very difficult. As they go downhill, they pick up speed.”
