By Mike Caggeso
Sony Corp. (ADR: SNE) posted a loss of $19.9 million (17.96 billion yen) for its fiscal third quarter ended Dec. 31, with net profit falling 95% – all just a preview of its forecasted annual operating loss of $2.9 billion.
Other Japanese electronics manufacturers are sharing the same sources of pain: A rising yen and falling demand. But Sony's case is especially troubling.
Its products are getting annihilated in the consumer marketplace. Its Walkman was the premier portable music player nearly three decades ago. Now its unmemorable MP3 players don't hold a candle to Apple Inc.'s (AAPL) iPod and accompanying iTunes software.
Sony's Playstation was the top-selling video game console for nearly a decade, but now its lagging Nintendo Co. Ltd.'s (ADR: NTDOY) hugely popular Wii. Sony Playstation 3 sales fell to 4.46 million units in 2008 from 4.9 million a year earlier.
Unable to gain traction Sony announced in December that it planned to eliminate 16,000 jobs (8,000 full-time), the biggest of several moves intended to cut more than $1.1 billion (100 billion yen) from its annual expenses by March 31, 2010.
Its cost-cutting operation only applies to its electronics division, and further plans include curbing investments by 30% and ceasing production at two overseas manufacturing sites.
That's not to say Nintendo is recession proof.
While Nintendo posted a 21% rise in operating profit for its October to December quarter, it also cut its annual profit forecast by a steep 16% and slightly lowered the sales target for its Wii, Reuters reported.
To be sure, Nintendo's new profit forecast of $5.9 billion (530 billion yen) would still be a company record.
"It will be a major shock for Nintendo bulls out there if they are reducing Wii unit guidance because people expect this to go up," Hiroshi Kamide of KBC Securities told Reuters.
Like Sony, Toshiba Corp. also forecast an annual loss, as demand for semiconductors is dry across the consumer electronics industry.
Japan's largest chipmaker said is will lose up to $3.1 billion (280 billion yen) for its fiscal year ending March 31. That's a stark reversal of its $1.4 billion (127.4 billion yen) profit a year earlier.
"Recovery in chip-market demand is not likely until at least October, which means our semiconductor business will probably turn profitable in the second half of the next fiscal year," Toshiba President Atsutoshi Nishida said at a news briefing in Tokyo today, Bloomberg reported.
Toshiba said it also will cut 4,500 temp jobs by the end of March (while adding 500 full-time workers) and delay construction of chip plants in northern and central Japan.
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Facing Falling Demand, Sony Lops Off 16,000 Jobs