Sony Corp surprised Wall Street this week by posting a 47 percent loss in quarterly profit. The company blames the mobile phone joint venture with Sweden’s Ericsson for its decline.
The mobile cell phone company also lowered its group net profit forecast for the year to March by 17 percent, citing the slump at Sony Ericsson and weakening prospects for its electronics division as rivals try to undercut its Cyber-shot digital cameras and Vaio PCs on price.
“On digital cameras and camcorders, growth in developed markets such as Europe and the United States slowed and competition intensified, resulting in smaller profits,” Sony Senior Vice President Naofumi Hara.
With an economic slowdown in the United States, rising prices for raw materials and a firmer yen have been slicing into the profitability of Japanese exporters. Analysts said Sony is being hit particularly hard.
“Overall, Sony’s earnings gave me the impression that the company is in a severe state,” Daiwa Institute Research analyst Kazuharu Miura said. “The electronics division seems to be in a particularly tough situation, hit by sharp price falls.”
Sony reported net profit of 326 million in April-June, down from 615 million a year earlier and below the average estimate of 520 million according to estimates.