Sony has sent shockwaves through the financial markets by revising its forecast for the fiscal year by almost £4bn to predict its first operating loss in 14 years.
The technology and entertainment behemoth is now predicting an operating loss of 260bn yen (£2.1bn) for the year ending 31 March. Previously, the Japanese company had anticipated an operating profit of 200bn yen, but sales have been hit in recent months as the economic crisis has sapped consumer spending.
The revision has been attributed, in part, to the recent appreciation of the yen. Sony's forecast for electronic goods has been lowered by a massive 340bn yen, predominantly due to reduced demand and increased price competition. Estimates for turnover from gaming products and films have been lowered by 30bn yen and 13bn yen respectively, attributable to a drop in sales and the strength of the Japanese currency.
The announcement sent Sony's share price tumbling by seven per cent. The company is now set to accelerate restructuring plans unveiled by chief executive Howard Stringer last month. About 16,000 permanent and temporary staff are to be axed worldwide and five or six plants will be closed.
Executive bonuses will be severely curbed with many, including Stringer, foregoing their bonus entirely. Operations such as software development may be outsourced and early retirement may be offered to help reduce headcount. The company hopes these measures will facilitate about 250bn yen worth of annual savings by March of next year.
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