Sony slashes earnings forecast to just 10 per cent of initial outlook

By Peter Gothard
01 May 2014 View Comments

Sony has slashed its earnings expectations for the third time this year, resting on only 10 per cent of its initial outlook for 2014.

The company has cited its February 2014 exit from the PC business as the major contributor to this devaluation, but shareholders are becoming impatient with CEO Kazuo Hirai's failures to live up to his promises to turn the company around.

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Hirai has now made five profit forecast cuts during his two years at Sony. His attempts to resist hedge fund manager Daniel Loeb - who has a six per cent stake in the company and who has suggested that Sony spin off its entire entertainment business  - will now perhaps prove tougher than ever.

The company makes most of its money from its financial services and insurance groups.

Sony expects now to make an operating profit of only 26bn yen (£150.6m) this year down from a previous estimate of 80bn yen. Last May, the 2014 forecast was 230bn yen.

Ten years of losses on television sales alone have cost Sony $7.8bn (£4.6bn), and even the company's new games console the PlayStation 4, which appears to be beating Microsoft's rival machine the Xbox One in a challenging market, is expected to need at least another year before it can turn a profit.

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