Sony was hit hard during the fourth quarter--its fiscal third quarter--and its incoming CEO knows some serious work will be needed to turn things around.
The electronics giant today announced that it generated 1.82 trillion yen (about $23.4 billion) in revenue in the quarter just ended (PDF), dropping 17 percent year over year. The company posted a loss of 159 billion yen ($2.04 billion), representing a steep decline from the 72.3 billion yen profit it posted during the same period last year.
Sony's earnings were weighed down by a dismal quarter for the company's Consumer Products & Services division, which includes LCD televisions and the PlayStation 3. Sales in that division were down 24.4 percent last quarter, closing the period at $12.8 billion. Sony's Professional, Device & Solutions business, which includes component and semiconductors, was down 20.7 percent to $3.9 billion. Even Sony's Music division saw revenue slide by 11.7 percent to $1.6 billion.
"Consolidated sales decreased significantly year-on-year primarily due to the impact of the floods in Thailand, deterioration in market conditions in developed countries, and unfavorable foreign exchange rates," Sony said today in a statement to investors explaining its poor performance.
Sony's troubling fiscal third-quarter performance comes just a day after the company announced it would be replacing its current CEO and president Howard Stringer with Kazuo Hirai on April 1. In a statement announcing the change, Stringer, who will become Sony's board chairman on June 1, said he believes Hirai's "tough-mindedness and leadership skills will be of great benefit to the company and its customers in the months and years ahead."
In an interview published today with the Wall Street Journal, Sony's incoming president and CEO didn't tout his own abilities, but did acknowledge that he'll have to put them all to work in order to fix his ailing company.
"I thought turning around the PlayStation business was going to be the toughest challenge of my career, but I guess not," Hirai said to the Journal about Sony. "It's one issue after another. I feel like 'Holy s--, now what?'"
Hirai cautioned that it's not necessarily time to sound the alarm on Sony, but if his company doesn't "buckle down and be realistic," the firm could find itself "in some serious trouble."
Some might argue Sony is already in trouble. Under Stringer's leadership, the company watched its revenue slide from 8.8 trillion yen in its 2008 fiscal year to 7.2 trillion yen last year. The company has been in the red for the last three years, and its stock price has slid over the last five years by 62 percent. In pre-market trading today, Sony's shares are down around 4 percent in response to today's bad news.
Looking ahead, Sony has lowered its financial forecast for its fiscal year ending March 31. The company says it will now generate 6.4 trillion yen in revenue, down from the 6.5 trillion yen it initially hoped to post on the year, and will suffer a net loss of 220 billion yen--much worse than the 90 billion yen it originally forecast.