Sony who witnessed an 85% decline in mobile phone sales in Australia in Q1 2016, has overnight come out and said that their profits are set to half, they have also confirmed that their mobile division is getting smashed by their inability to compete.
Sony Back Making Losses, Mobile Division Drops $755M
The Japanese Company said that their mobile division revenues dropped by 20% year on year and that losses have risen to US$544 million (A$755).
Ten days ago when ChannelNews approached Sony about the downturn in their mobile business Jenneth Orantia a Senior Consultant at Hausmann Sony’s long time spin doctors bleated, “Sony does not comment on rumours or speculation”. This was after we presented IDC data that revealed that Sony Mobile sales had fallen from 62,000 units to just 7,000 in Australia.
Research firm IDC predicted in March that 2015 was likely the last year of double-digit growth in the smartphone market.
Sony financial chief Kenichiro Yoshida said last month the company had overestimated growth in the smartphone market.
The only bright light for Sony is their Playstation Division which reported an 84.3% year on year increase in income to US$785M.
It appears that Sony’s games division is winning ground at the expense of Microsoft’s Xbox.
The company said that PlayStation hardware and software sales are contributing to the increase.
With an upgraded PlayStation 4 rumoured to hit the market next year, and with PlayStation VR set to hit the shelves by the end of the year along with some of the 100+ games already in development, it’s likely that Sony’s game division will grow further claim analysts.
Also affecting the Company who in Australia has witnessed massive staff churn over the past few years, is the decline in iPhone sales.
According to their latest financials, sluggish sales of Apple’s iPhones are starting to hit Sony’s bottom line, with the electronics company warning that it expects the business that makes components for smartphones to post a wider operating loss.
The warning puts into question Sony’s ambitious growth plans that were centred around its image sensors and camera modules that go into smartphones.
This time last year Sony was bragging that these businesses were the “pillars to its turnaround efforts”.
Sony said that they will report a $366 million operating loss for the fiscal year ending in March 2017, widening from a loss of ?29.2 billion a year earlier.
Sony attributed the wider loss to its decision to cancel planned development and production of high-end camera modules for external clients.
In Australia Sony TV sales are also struggling with several brands including Samsung, LG, Hisense and even the Aldi house brand UHD TV outselling Sony TV’s.
The Japanese Company is also trying to offload their TV business after selling their Vaio PC business 18 months ago.
The company had delayed the release of its 2016-2017 guidance until last night after the twin earthquakes in Japan halted production of image sensors at one of its plants.
Sony said it expects earthquake-related damages and loss of sales to wipe off over ?115bn from its operating profit.
The company had counted on steady growth in image sensors, which are used in Apple’s iPhones, to drive its turnaround after it pulled back from consumer electronics businesses such as laptops and televisions.
Company officials said Sony also doesn’t want to risk its inventory rising unexpectedly because the component-production process is too complex to promptly adjust output when the smartphone industry changes quickly.
Apple has been offering its suppliers an easy growth path in recent years with its popular iPhones and iPads, but recent earnings figures showed growth slowing sharply. Last month, Apple posted its first quarterly decline in revenue in 13 years because of weaker iPhone sales.
“The saturating high-end smartphone market has shrunk potential short-term business opportunities of the module business to a level that is no longer worth the risk,” one Sony official said.