Sony Falls Most in Eight Months After Forecasting Fourth Annual Net Loss

By Kyung Bok Cho and Kazuyo Sawa - Nov 4, 2011 4:14 PM GMT+0700

Sony Corp. (6758), Japan’s largest exporter of consumer electronics, fell the most in almost eight months in Tokyo trading after forecasting a full-year loss because of a strong yen, waning TV sales and flooding in Thailand.

Sony declined 7.9 percent, the biggest drop since March 15, to 1,400 yen at the close of trading today. The benchmark Nikkei 225 Stock Average gained 1.9 percent. Markets were closed yesterday for a holiday.

The company, based in Tokyo, said Nov. 2 it will lose 90 billion yen ($1.2 billion) in the year ending March, compared with a previous projection for a 60 billion yen profit, as it contends with competition from Apple Inc. and Samsung Electronics Co. The loss will be Sony’s fourth in a row.

“The fundamental issue is not external factors, but rather the need to create products and a business model that can differentiate Sony from the competition,” Yoshiharu Izumi, an analyst with JPMorgan Chase & Co. said in a report. He cut the company’s rating to “neutral” from “overweight.”

The world’s No. 3 TV maker slashed television sales targets after the yen reached a postwar high and floods in Thailand cut production. The maker of Bravia TVs lowered its annual sales projection to 20 million televisions from 22 million. It is also taking a 50 billion-yen charge for streamlining its TV operation.

Sony cut annual sales targets for personal computers, compact cameras and Blu-ray DVD players. The company has declined 52 percent this year in Tokyo trading, compared with a 15 percent decline by the index.

“Revised guidance is worse than expected,” Yuji Fujimori, a Tokyo-based analyst at Barclays Plc, wrote in a note to clients yesterday. “Sony’s share price upside potential has diminished, even allowing for earnings recovery capacity in the next fiscal year.”

Fujimori lowered his rating on Sony to “ equal weight” from “overweight”. His target price was cut to 1,600 yen from 2,500 yen.

To contact the reporters responsible for this story: Kyung Bok Cho at kcho7@bloomberg.net; Kazuyo Sawa in Tokyo at ksawa3@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net