Sony Corp. President Kazuo Hirai is relying on selling real estate to make the company’s first profit in five years as he struggles to find products able to compete with Apple and Samsung devices.
Japan’s largest consumer-electronics maker posted an eighth consecutive quarterly loss and again cut sales targets for TVs, gaming devices and compact cameras. It reiterated a forecast for full-year net income of $215 million, including gains from the $1.1 billion sale of a New York building.
Shares dropped 10 percent, the most since Nov. 6, 2008, in Tokyo trading. It was the worst performer among the 225 members of the benchmark Nikkei 225 Stock Average, which slid 1.8 percent.
“Sony’s earnings underscore the difficulties in the electronics market,” Goldman Sachs Group Inc. analysts, led by Takashi Watanabe, said in a note Friday. “We stay cautious considering the shrinking market for Sony’s conventional products and tougher competition.” They reiterated a neutral rating.
Hirai made progress toward turning around an unprofitable TV business even as Sony posted a quarterly net loss on sluggish sales of liquid-crystal display sets, digital cameras and personal computers. His revival plan featuring 10,000 job cuts hasn’t delivered the same results as that of Panasonic Corp. President Kazuhiro Tsuga, whose company posted surprise net income.
“Sony’s earnings are really disappointing,” said Ichiro Takamatsu, a fund manager at Bayview Asset Management Co. “It hasn’t restructured its business thoroughly enough.”
The company cut its sales forecast for portable game players in the year ending March to 7 million units from the 10 million predicted three months ago and the 16 million forecasted in May. The TV sales outlook was pared to 13.5 million units from 17.5 million predicted in May.
The electronics business faces a “tough environment,” Chief Financial Officer Masaru Kato said at a briefing. The company expects a loss at its TV-making operations this fiscal year. The imaging and gaming divisions will have “significant” drops in operating profits, it said.
The TV maker reported a nine-month net loss, meaning it needs a profit in the fourth quarter to hit its full-year goal. It expects operating-income gains of about $685 million from selling the New York building, with the sale to Chetrit Group due to close next month.
The company is also looking at other possible asset sales, some of which are included in the full-year forecast, Shiro Kambe, a spokesman, said Thursday. It has previously sold land, buildings, businesses and securities holdings, Kato said.
Sony could sell its 25-story office building in Tokyo, news agency Reuters reported Jan. 10, citing people with direct knowledge of the plan.
Sony sold a chemical-products making unit and stakes in two display-making ventures after reporting losses selling TVs.
“Having assets to sell is saving Sony,” said Mitsuo Shimizu, a Tokyo-based analyst at Iwai Cosmo Holdings Inc. “It isn’t really clear yet what can start driving growth.”
Sony posted a third-quarter operating profit compared with an operating loss a year earlier.
“Sony is supposed to sell strong products that aren’t reliant on currency swings,” said Yuuki Sakurai, president of Fukoku Capital Management Inc. “We need to see those products before we’ll invest in Sony again.”
Panasonic is in “transition” toward profitability, Chief Financial Officer Hideaki Kawai said Feb. 1 after the company eliminated more than 38,000 jobs in the past year. Domestic rival Sharp Corp. also reported it made its first operating profit in five quarters.
The yen has plunged since the end of September, helped by new Prime Minister Shinzo Abe’s call for “bold monetary policy” to beat deflation and weaken the currency.
“It’s not that we are counting on a weaker yen trend, but if the trend continues, there will be a significant upside for our earnings in the coming fiscal year,” he said.
Speculation that the weaker yen will boost earnings had helped Sony’s shares almost double in Tokyo trading in two months.
Hirai, who took over in April, is trying to revive the electronics business by focusing on mobile devices, games and digital imaging. He is cutting jobs and has pledged to make the TV unit, the world’s third-biggest, profitable in the year starting April 1.
The company also sold five-year convertible bonds in November, its first offering of such securities since 2003.
The mobile-products division, which makes Xperia smartphones and tablet computers, posted an operating loss that was narrower than the loss a year earlier. The loss was also smaller at the home-entertainment unit, which includes TVs, from the year before.
Sony is adding new products in a bid to lure consumers from Apple iPads and Samsung Galaxy devices.
At last month’s Consumer Electronics Show in Las Vegas, it introduced new higher-definition TVs, water-resistant smartphones and a more-powerful digital camera.
The company also revealed plans to offer Ultra-High Definition content from Sony Pictures for downloading on its TVs.
A PlayStation event has been announced for Feb. 20, stoking speculation the company will unveil a fourth-generation gaming console. Sony also has invested in medical-device maker Olympus Corp. and gaming platform company Gaikai Inc., and in facilities to make image sensors.
Suwon, South Korea-based Samsung — the world’s biggest maker of smartphones, TVs and computer-memory chips — last month warned that profit this year would be hit by a strengthening currency, the won. It also said global demand for smartphones was slowing.
Apple’s profit grew at the slowest pace since 2003 in the quarter ended December as the lack of a low-cost iPhone dented growth in emerging markets.