Sony Mobile Drags, FY 2014 Net Loss Forecast Widens to $2.1 Billion

by Sohrab Osati | Sep 17, 2014 | 5 comments
Sohrab Osati

Kaz_Hirai_Xperia_Z1Poor Sony. I mean this from a emotional standpoint for a company that continues to endure loss year after year, which surely takes a toll on employees and moral. With an expected $2.1 billion net loss for FY 2014, I of course mean this in a financial aspect as well. Despite Sony announcing a surprise $261 million Q1 2014 profit, the company is expecting to lose $2.1 billion for the year, up from $500 million. So how does a company lose an additional $1.7 billion in one year? In short, smartphones. Despite what appeared to be a transitional period for Sony and a gained momentum in mobile, the division Sony has been most bullish about will drag down the company considerably as they struggle to move units, especially in the mid-range market.

According to Sony, the loss is due to “goodwill impairment charge” as they’ve been unable to convince consumers to jump aboard their Xperia line. Till now, the strategy for Sony has been to sell their smartphones with razor thing margins in order to gain marketshare. Not only have they not been able to do that, but they’ve also seen the number of handsets sold reduce in the last year in the mid-range category. This loss in sales is mostly attributed to the rise of cheaper Chinese alternatives which has started to even take a toll on Samsung as they’ve seen their units sold dip along with profits.

 The overarching strategy for the MC segment has been revised to reduce risk and volatility, and to deliver more stable profits 

The above statement from Sony points to a shift away from increasing marketshare and instead a focus on profits. Of course the statement itself is a bit alarming, seeing how it’s not as if there is a simple course to pursue to increase profits versus increased marketshare. If there was, surely Sony would have pursued such strategy long ago. Sony has also made similar statements in regards to VAIO and televisions. As Sony fans will know, Sony sold off VAIO earlier this year and also spun off their television division.

While I’ve always been bullish on Sony and the products they make, clearly management is out of touch with what it takes to turn around the battered giant and it’s a shame.

Discuss:

What can Sony do to turn around their mobile division?

[Via Sony]