Sony just announced its Q4 results with a 95% decline in profits. Extracted from Associated Press :
Sony Corp. said its net profit shriveled to 10.4 billion yen ($115.6 million) in the third quarter from 200.2 billion yen a year earlier. Revenue fell 25 percent to 2.15 trillion yen from 2.86 trillion yen. The quarter includes the year’s peak shopping season and is usually a big one for its core electronics division, which generates over half of its total revenues with well-known products like Bravia TVs, Cyber-shot digital cameras and Vaio computers.
[…] its usually dependable electronics division posted its first-ever operating loss in the fiscal third quarter. It also reiterated its forecast for a net loss of 150 billion yen ($1.67 billion) for the full fiscal year through March — its first loss in 14 years.
The Japanese giant blames the poor economic conditions, but Chief Executive Howard Stringer should re-consider Sony’s strategy to bring it back to a leading position, as things have not been rosy for Sony lately:
- PS3, the console with most performing specs, is being outsold by both Xbox 360 and Wii, with game developers threatening to divest from PS3 game versions as the downturn squeezes funds to develop in multiple platforms
- Blue-ray is not getting mass adoption, and it may lose the war to online distribution for HD video as broadband speeds increase
- Vaio computer sales are affected by the trend of cheap Netbooks, that can replace the nicest smallest Vaio models at a fraction of cost
- LCD TVs Bravia is overpriced compared to similar models from Samsung or LG in an increasingly competitive market
- Cyber-shot brand is losing ground to Canon and Nikon
- Walkman MP3 players lost the battle to iPod long long ago, including Japan
- Sony Ericsson is being surpassed by Samsung and LG growing faster, not to name its brand equity eroded by rising mobile device stars from Apple and RIM. If they do not do something striking quick, 2009 could be the last year for Sony Ericsson.
The economic downturn is not helping Sony’s strategic bets on PS3, Vaio or Blue-ray. Still a change is required, or Sony will end up entertaining the future only with their movies.