Sony May Show First Operating Loss in 14 Years

January 13th, 2009 at 12:00 am

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Sony, one of the world’s largest electronics manufacturer may post its first annual loss this year.  After 14 years of consistently being an earner in the industry, Sony is now on the verge of reporting an annual loss in operational expenses of $1.1 billion.  Causes for the negative output is the stronger yen and sluggish sales, both translate into the global financial crisis.

Shares of Sony tumbled 9%, slicing $2 billion off its market value to $22 billion as a direct result of the crisis.  Moreover, the global economic slump has dampened demand for electronics products, causing inventories to pile up and prices to tumble, and Sony is feeling the pinch of the downturn in every corner of its operations, which range from semiconductors to movies and insurance.

Solution?  As many of the world’s largest companies put it, restructure, reorganize and streamline.  If Sony does report a loss, stockholders will be pressuring management to implement some changes and most changes would come in the form of lay offs and sale of auxiliary business units.

"I think there’s a good chance the company will further accelerate its restructuring from what has been announced in December," said Daiwa Institute of Research analyst Kazuharu Miura.

Sony has not released an official statement yet but this information came from an insider who did not wish to be name because Sony has not yet revised its forecasts.  Nonetheless, the scenario does look bleak and most likely Sony will be restructuring and laying off workers regardless if they announce a loss or not.