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Sony Losses Spiral To $2.9 Billion, Game Division Underperforms

Sony Losses Spiral To $2.9 Billion, Game Division Underperforms

January 22, 2009 | By David Jenkins

January 22, 2009 | By David Jenkins
More: Console/PC

Sony Corp. has revised its projected annual operating loss from a previously expected figure of ¥100 billion ($1.1bn) to as much as ¥260 billion ($2.9bn).

As previously reported, the loss will be the company’s first in 14 years and only the second in its history.

The strong yen and declining demand for its products in the current global economic environment were again blamed for the results. Previously, Sony had expected a ¥200 billion profit for the year.

As stated yesterday, the company is accelerating its restructuring plans, with job cuts of up to 16,000 expected. According to a Reuters report, Sony has doubled its cost-cutting target for the financial year ending March 2010, to ¥250 billion ($2.8bn).

As part of its cost-cutting initiatives, Sony indicated future headcount reductions and other restructuring measures to its movie, music, and games divisions, according to a Sony presentation slide published by game weblog Kotaku:

In addition, the company has announced that it expects losses for its games division to rise up to ¥30 billion ($338 million) for the fiscal year, with half of that attributed to lower than expected sales.

Although Sony’s games division is still struggling to turn a profit, after previously being one of the company’s most profitable areas, the main problem continues to be television sales. Digital camera and video recorder sales have also disappointed, with even Sony Pictures underperforming.

Sony has said it will end TV production and design at one plant in Japan and reduce its TV design headcount by 30 percent overall worldwide. Plans are also afoot to consolidate its workforce in areas such as batteries and small and mid-size LCD panels.

Although no specific plans for Sony Computer Entertainment (SCE) have been revealed, SCE Europe president David Reeves insisted in December that the division was “not scaling back at all”.

[UPDATE: Details on game division losses, possible cutbacks added.]

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