ID :
184948
Fri, 05/27/2011 - 19:04
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https://oananews.org//node/184948
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FOCUS: Sony faces another challenging year after disaster, data breach
TOKYO, May 27 Kyodo - After three straight years in the red, Sony Corp. still faces a rough year ahead, as the electronics giant struggles to make its mainstay television business profitable amid a host of challenges.
Like other Japanese electronics makers, Sony's business performance was affected by the March 11 catastrophic earthquake and tsunami, leading the company to post a massive group net loss of 259.59 billion yen for the fiscal year ended March.
But the natural disaster, which is likely to have a negative impact of some 440 billion yen in sales and about 150 billion yen on its operating balance in the year begun in April, is not the only hurdle the company needs to overcome.
The recent data breach that affected over 100 million accounts, mainly of its PlayStation gaming network, could deal a blow to the company's goal of boosting its network business, through which Sony aims to integrate its hardware and software, analysts said.
''The incident certainly did not make a good impression on the public and consumers, as it came at a time when the company planned to proceed with a strategy to spread its network business to personal computers, tablets and smartphones, not only PlayStation game consoles,'' said Koki Shiraishi, an analyst at Daiwa Securities Capital Markets Co.
Sony officially announced the massive data breach last month, a day after saying it would launch tablet computers around the world this fall with the aim of taking the second-largest share in the global market after Apple Inc., maker of the popular iPad.
The trouble appears far from conclusion, as Sony encountered additional cyber attacks on its online music service in Greece and mobile phone unit in Canada a month afterward.
Though the data breach may have only a limited impact on Sony's money-making gaming business, it could create uncertainty surrounding the prospects of its whole network business, Shiraishi said.
The company also continues to face the difficult task of turning a profit in its TV business, which has remained in the red for the seventh straight year in the just-ended fiscal year.
The business incurred a loss of 75 billion yen in fiscal 2010, deteriorating by 2 billion yen from the previous year, as it was forced to engage in price competition with rivals like South Korea's Samsung Electronics Co. and LG Electronics Inc.
''We were aiming to make the business profitable before the disaster,'' Sony Chief Financial Officer Masaru Kato told a press conference Thursday as he admitted the company now expected the TV business to remain in the red this fiscal year.
''The business environment means it is not easy for us to say whether the business can be profitable,'' Kato said, citing such factors as harsh price competition and shortages in some parts after the disaster.
In addition, the strategy to sell value-added TVs has not proved to be successful so far, as 3-D TVs and Internet TVs -- both launched by Sony -- have failed to attract customers, Daiwa's Shiraishi said.
''In the global TV market, price has become the only focus, triggering the collapse of prices,'' he said, adding that no one is making profits in the business at present.
But the company still has an advantage over rivals in its bid to make its TV a ''network gateway'' by connecting it to the Internet, Shiraishi said, noting that Sony has a variety of content such as movies and music which are needed to make the network business profitable.
''It depends on how the company succeeds in motivating customers to buy Sony's TV to see its content,'' Shiraishi said.
Shiro Kambe, senior vice president, stressed that the company aims to place TV as a household platform offering added value, by connecting it to the network, rather than seeking to profit directly from the TV business itself.
Despite the data breach incident, ''We will not change our plan to place the network business as one of the pillars to generate profits in the future,'' CFO Kato said.
Like other Japanese electronics makers, Sony's business performance was affected by the March 11 catastrophic earthquake and tsunami, leading the company to post a massive group net loss of 259.59 billion yen for the fiscal year ended March.
But the natural disaster, which is likely to have a negative impact of some 440 billion yen in sales and about 150 billion yen on its operating balance in the year begun in April, is not the only hurdle the company needs to overcome.
The recent data breach that affected over 100 million accounts, mainly of its PlayStation gaming network, could deal a blow to the company's goal of boosting its network business, through which Sony aims to integrate its hardware and software, analysts said.
''The incident certainly did not make a good impression on the public and consumers, as it came at a time when the company planned to proceed with a strategy to spread its network business to personal computers, tablets and smartphones, not only PlayStation game consoles,'' said Koki Shiraishi, an analyst at Daiwa Securities Capital Markets Co.
Sony officially announced the massive data breach last month, a day after saying it would launch tablet computers around the world this fall with the aim of taking the second-largest share in the global market after Apple Inc., maker of the popular iPad.
The trouble appears far from conclusion, as Sony encountered additional cyber attacks on its online music service in Greece and mobile phone unit in Canada a month afterward.
Though the data breach may have only a limited impact on Sony's money-making gaming business, it could create uncertainty surrounding the prospects of its whole network business, Shiraishi said.
The company also continues to face the difficult task of turning a profit in its TV business, which has remained in the red for the seventh straight year in the just-ended fiscal year.
The business incurred a loss of 75 billion yen in fiscal 2010, deteriorating by 2 billion yen from the previous year, as it was forced to engage in price competition with rivals like South Korea's Samsung Electronics Co. and LG Electronics Inc.
''We were aiming to make the business profitable before the disaster,'' Sony Chief Financial Officer Masaru Kato told a press conference Thursday as he admitted the company now expected the TV business to remain in the red this fiscal year.
''The business environment means it is not easy for us to say whether the business can be profitable,'' Kato said, citing such factors as harsh price competition and shortages in some parts after the disaster.
In addition, the strategy to sell value-added TVs has not proved to be successful so far, as 3-D TVs and Internet TVs -- both launched by Sony -- have failed to attract customers, Daiwa's Shiraishi said.
''In the global TV market, price has become the only focus, triggering the collapse of prices,'' he said, adding that no one is making profits in the business at present.
But the company still has an advantage over rivals in its bid to make its TV a ''network gateway'' by connecting it to the Internet, Shiraishi said, noting that Sony has a variety of content such as movies and music which are needed to make the network business profitable.
''It depends on how the company succeeds in motivating customers to buy Sony's TV to see its content,'' Shiraishi said.
Shiro Kambe, senior vice president, stressed that the company aims to place TV as a household platform offering added value, by connecting it to the network, rather than seeking to profit directly from the TV business itself.
Despite the data breach incident, ''We will not change our plan to place the network business as one of the pillars to generate profits in the future,'' CFO Kato said.
