Sony Corp has slashed it guidance for earnings for the third time in just one year to barely 10% of what it initially had for an outlook as more losses from its PC sector exit have cast a cloud over the struggling division of electronics.
The steep slashes in earnings mark the failure of Kazuo Hirai the CEO to fulfill the promises he made when taking the reins of the electronics company nearly two years ago of pushing it into the black. This casts even more doubt over the financial management of his after five cuts in earnings guidance in the two years he has been leading the company.
The misses in estimates, the latest only two weeks prior to Sony announcing its results for the full year are fueling anger amongst its investors even as the CEO rebuffs Daniel Loeb the billionaire fund manager’s proposal to spin off the profitable entertainment business of Sony.
On Thursday, Sony cut its operating profit forecast to $254 million or 26 billion yen for the year ending in March for a previous estimate of 80 billion yen and down form estimate initially of 230 billion last May.
Sony said it would be writing down another 30 billion yen on its Vaio unit, which reflects a sharp fall in PC sales showing how consumers are shunning the brand after the decision by Sony last February to exit the business.
That would swell the restructuring costs for Sony this year, which the company said last February would be 70 billion yen.
Sony has widened its estimate of a net loss for the year to more than 130 billion yen from the 110 billion forecasted in February after reversing a profit outlook that it originally forecasted.
The company is also booking impairment losses of 25 billion yen for its unit of disc production because of weak demand across Europe, as streaming services online such as Netflix eat into the DVD sector.
Sony has struggled to recover following the undercutting of its rivals in Asia in its crucial markets.
Prior to the cut on Thursday, Sony missed in 10 of its prior 12 estimates.
Get Analysts' Upgrades and Downgrades Daily - Enter your email address below to receive a concise daily summary of analysts' upgrades, downgrades and new coverage with MarketBeat.com's FREE daily email newsletter.