Sony shares have plunged more than 11 per cent after the Japanese electronics giant slashed its full-year profit outlook, dealing a blow to its much-vaunted turnaround plan.
The stock finished at Y1,668 in Tokyo on Friday, a day after Sony cut its earnings forecast for the year to March by 40 per cent because of tepid demand for its digital cameras, personal computers and televisions.
It also pointed to a weaker-than-expected performance in its film business because of box office flops such as White House Down and After Earth.
On Thursday, the maker of Bravia televisions and PlayStation games consoles said it lost Y15.8 billion ($A170.44 million) in the six months to September and cut its full-year profit outlook to Y30 billion from Y50 billion.
Before the tumble, Sony stock had nearly doubled since January as it rode a strong rally.
“Conditions are harsher than what we had anticipated,” Sony Chief Financial Officer Masaru Kato told reporters on Thursday.
The weak results prompted a warning from some analysts that the firm may have to slash its business further to climb back into the black.
A “more aggressive reform to revamp the company’s product portfolio and to cut fixed costs may be required,” ratings agency Fitch warned in a report Friday, and said it was considering a credit rating downgrade.
“Another round of major cost cutting is a distinct possibility.”
The agency downgraded Sony last year, cutting its credit rating to junk for the first time while doing the same to rival Panasonic.
Fitch and other global ratings agencies have been slashing their ratings on the sector as they pointed to weak balance sheets and a declining position in the global electronics market.
Hiroichi Nishi, SMBC Nikko Securities general manager of equities, said Sony’s slimmed down forecast was not a complete shock, but “the negative news came just when the overall market was weak”.
Japan’s electronics giants, including Sony rivals Panasonic and Sharp, have been undergoing painful restructuring to stem years of losses as they struggle to keep up in the low-margin television business.
Apple and South Korea’s Samsung surged ahead of their Japanese rivals in the lucrative smartphone sector, although Sony has done better than its domestic rivals with its Xperia offering.
Panasonic and Sharp shares were lifted Friday, rising 6.19 per cent and 1.03 per cent respectively, as the pair reported improved financial results a day earlier.
Sony chief Kazuo Hirai has shrugged off pleas to abandon the television unit, while the firm has also turned down a call by US hedge fund boss Daniel Loeb to spin off 20 per cent of its entertainment arm, which includes the Hollywood film studio, to boost profits.
The company is now banking on strong holiday sales of its PlayStation console as rivals Nintendo and Microsoft also jockey for control of the sector.
