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POLITICAL ECONOMY
Sony highlights Japan electronics firms' woes
by Staff Writers
Tokyo (AFP) Aug 2, 2012


Sony on Thursday reported a widening quarterly loss and trimmed its profit forecast for the year, again underscoring the challenges faced by Japan's troubled electronics giants.

Hammered by giant losses, particularly in the television business, the sector has been struggling with a strong yen, falling prices, high labour costs and competition from foreign rivals such as South Korea's Samsung.

Weak demand in Europe, a key market for everything from Japanese televisions and mobile phones to vehicles and electronics parts, has also dented their results with the continent's turmoil threatening to get worse.

Sony rivals Sharp, Panasonic and Toshiba have also felt the pain amid a sagging global economy.

"The operating environment for Sony in the first quarter... continued to be severe due to factors including a slowing of the global economy and entrenchment of the appreciation of the yen exchange rate," it said Thursday.

For the fiscal first-quarter through June, the maker of PlayStation videogame consoles and Bravia televisions said its net loss widened to 24.6 billion yen ($313.5 million), dwarfing a 15.5 billion yen loss a year ago.

Sony, reeling from a 456.66 billion yen annual loss, its fourth in a row, also warned it would now eke out an annual net profit of 20 billion yen, down from an earlier projection of 30 billion yen for the year through March 2013.

The lowered forecast came "in anticipation of a severe operating environment from the second quarter onward resulting from uncertain foreign exchange rates and trends in the global economy", it said.

In April, Sony said it would cut about 10,000 jobs and spend nearly $1.0 billion on a massive corporate overhaul designed to shake up its product line-up and chop costs, which its new chief Kazuo Hirai described as "urgent".

The red ink at Sony came as Sharp said Thursday it will cut 5,000 jobs by March as it reported a quarterly loss of 138.4 billion yen, nearly three times bigger than a year ago.

Sharp said it would remain in the red for the rest of the year amid losses at its struggling TV business.

Toshiba, meanwhile, on Tuesday reported a quarterly net loss of 12.1 billion yen ($155 million) stemming from restructuring costs and the impact of a strong yen, reversing a net profit a year earlier.

Panasonic offered a glimmer of hope, saying this week it had swung back into the black for the first quarter, after a record 772.2 billion yen annual net loss, one of the worst-ever for a non-financial Japanese firm.

But the firm also pointed to a strong currency as a major drag on earnings, and said its improved balance sheet was largely due to chopping costs rather than a jump in demand. Its quarterly sales fell 6.0 percent from a year ago.

Japan's exporters have been hammered by the yen's value -- which hit record highs against the dollar late last year and remains strong -- because it makes products pricier overseas while shrinking the value of foreign-earned income.

Last year's quake-tsunami disaster and flooding in Thailand also hurt the nation's manufacturers.

Despite a long-standing rivalry, Panasonic and Sony have said they would team up on making televisions equipped with organic light-emitting diode (OLED) panels in a bid to fight off foreign rivals.

The technology lets producers make TVs that consume less power while offering a sharper picture than conventional flat panels, and is expected to be one of the dominant technologies in next-generation televisions.

However, the industry has struggled to find an economical way to develop larger screens equipped with the technology.

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