Sony forecasts $2B loss as smartphones lag

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Sony forecasts $2B loss as smartphones lag
Sony Corp. President Kazuo Hirai listens to a reporter's question during a press conference at the company's headquarters in Tokyo Wednesday, Sept. 17, 2014. Sony expects its annual loss to swell to $2 billion and has canceled dividends for the first time in more than half a century after writing down the value of its troubled smartphone business. Citing intense competition, especially from Chinese rivals, Sony said it anticipates a net loss of 230 billion yen ($2.15 billion) for the fiscal year that ends March 31, 2015. (AP Photo/Toru Takahashi)
Sony Corp. Executive Vice President Kenichiro Yoshida, left, speaks as President Kazuo Hirai listens during a press conference at the company's headquarters in Tokyo, Wednesday, Sept. 17, 2014. Sony expects its annual loss to swell to $2 billion and has canceled dividends for the first time in more than half a century after writing down the value of its troubled smartphone business. Citing intense competition, especially from Chinese rivals, Sony said it anticipates a net loss of 230 billion yen ($2.15 billion) for the fiscal year that ends March 31, 2015. (AP Photo/Toru Takahashi)
Employees leave the headquarters of Sony Corp. in Tokyo Wednesday, Sept. 17, 2014. Sony expects its annual loss to swell to $2 billion and has canceled dividends for the first time in more than half a century after writing down the value of its troubled smartphone business. Citing intense competition, especially from Chinese rivals, Sony said Wednesday it anticipates a net loss of 230 billion yen ($2.15 billion) for the fiscal year that ends March 31, 2015. At left is Sony Executive Vice President Kenichiro Yoshida. (AP Photo/Toru Takahashi)
People are reflected on a wall of the Sony building at Ginza shopping district in Tokyo, Wednesday, May 14, 2014. Sony Corp. sank to a 138 billion yen ($1.3 billion) quarterly loss, hit by costs from selling its personal computer business and is forecasting more red ink as it struggles to execute a long-promised turnaround. The Tokyo-based maker of the PlayStation 4 game machine, Bravia TVs and Walkman digital player also reported Wednesday a loss of 128.4 billion yen ($1.3 billion) for the fiscal year through March 2014, about three times its loss of 41.5 billion yen the previous year. (AP Photo/Shizuo Kambayashi)
Sony Corp. Chief Financial Officer Kenichiro Yoshida speaks during a press conference at the Sony headquarters in Tokyo, Wednesday, May 14, 2014. Sony Corp. sank to a 138 billion yen ($1.3 billion) quarterly loss, hit by costs from selling its personal computer business and is forecasting more red ink as it struggles to execute a long-promised turnaround. The Tokyo-based maker of the PlayStation 4 game machine, Bravia TVs and Walkman digital player also reported Wednesday a loss of 128.4 billion yen ($1.3 billion) for the fiscal year through March 2014, about three times its loss of 41.5 billion yen the previous year. (AP Photo/Shizuo Kambayashi)
Sony Corp. Chief Financial Officer Masaru Kato speaks during a press conference at the Sony headquarters in Tokyo Tuesday, April 10, 2012. Sony more than doubled Tuesday its projected annual loss to 520 billion yen ($6.4 billion), its worst red ink ever, due to a massive tax charge. (AP Photo/Koji Sasahara)
Indians walks past a Sony showroom in Allahabad, India, Tuesday, April 10, 2012. Sony Corp. more than doubled its projected annual loss to 520 billion yen ($ US 6.4 billion), its worst red ink ever, due to a massive tax charge. (AP Photo/Rajesh Kumar Singh)
An employee waits for customers at a Sony showroom in Allahabad, India, Tuesday, April 10, 2012. Japanese electronics company Sony Corp. more than doubled its projected annual loss to 520 billion yen (US. $ 6.4 billion), its worst red ink ever, due to a massive tax charge. (AP Photo/Rajesh Kumar Singh)
An employee speaks on a phone at a Sony showroom in Allahabad, India, Tuesday, April 10, 2012. Sony Corp. more than doubled its projected annual loss to 520 billion yen ($6.4 billion), its worst red ink ever, due to a massive tax charge. (AP Photo/Rajesh Kumar Singh)
Indian customers look at products on display at a Sony showroom in Hyderabad, India, Tuesday, April 10, 2012. Sony Corp. more than doubled its projected annual loss to 520 billion yen ($6.4 billion), its worst red ink ever, due to a massive tax charge. (Mahesh Kumar A.)
FILE - In this Oct. 4, 2011 file photo, visitors try out head-mounted 3-D viewers at the booth of Japanese entertainment and electronics giant Sony Corp. during an annual electronics show in Chiba, east of Tokyo. Japanese news reports say Sony Corp. will cut about 10,000 jobs worldwide over the next year. The Nikkei business daily and other media Monday, April 9, 2012, said Sony's decision to slash 6 percent of its workforce comes as it struggles with weak TV sales and swelling losses. (AP Photo/Itsuo Inouye, File)
The logo of Sony Corp. is displayed on the wall of its showroom in Tokyo, Japan, Thursday, July 28, 2011. Sony Corp. sank to a 15.5 billion yen ($199 million) quarterly loss, hurt by the disasters in northeastern Japan, a massive online security breach and plunging TV prices. The Tokyo-based electronics and entertainment company said Thursday it had lowered its profit forecast for the fiscal year ending March 2012 to 60 billion yen ($769 million) from 80 billion yen ($1 billion) it gave in May. (AP Photo/Shizuo Kambayashi)
**FILE**In this Jan. 31, 2008 file photo, visitors look at an organic LED TV on display at Sony's showroom in Tokyo. Sony Corp. projected it would report its first annual net loss in 14 years Thursday, Jan. 22, 2009, and Chief Executive Howard Stringer vowed to turn around the company with pay cuts, job reductions and trendier gadgets. (AP Photo/Katsumi Kasahara, FILE)
Visitors walk out of Sony Building in downtown Tokyo Thursday, Jan. 26, 2006. Sony reported Thursday a 17.5 percent rise in profit for the October-December quarter and promised to stay in the black instead of posting a loss for the full year, thanks to a gradual improvement in its core electronics business. (AP Photo/Shizuo Kambayashi)
People stand in front of a Playstation logo at the Sony boothduring the China Joy fair in Shanghai on July 31, 2014. The gamer fair China Joy (China Digital Entertainment Expo & Conference) opens its doors from July 31 to August 3, 2014. Sony said on July 31 it saw a $261 million first-quarter net profit thanks to brisk sales of its PlayStation 4 console and a weak yen, but said it still expects a full-year loss. AFP PHOTO / JOHANNES EISELE (Photo credit should read JOHANNES EISELE/AFP/Getty Images)
A hostess holds a remote of a Playstation 4 at the Sony booth during the China Joy fair in Shanghai on July 31, 2014. The gamer fair China Joy (China Digital Entertainment Expo & Conference) opens its doors from July 31 to August 3, 2014. Sony said on July 31 it saw a $261 million first-quarter net profit thanks to brisk sales of its PlayStation 4 console and a weak yen, but said it still expects a full-year loss. AFP PHOTO / JOHANNES EISELE (Photo credit should read JOHANNES EISELE/AFP/Getty Images)
A guest walks past a Sony TV set in the showroom of the headquarters of Sony Corporation in Tokyo on August 1, 2013. Sony said on August 1 it had swung back to a net profit of 35 million USD for the April-June quarter, reversing a year-earlier loss as it boosted its annual sales forecast. AFP PHOTO / TOSHIFUMI KITAMURA (Photo credit should read TOSHIFUMI KITAMURA/AFP/Getty Images)
Masaru Kato, Chief Financial Officer (CFO) of Japan's electronics giant Sony Corporatioin, explains its finacial results for FY2011 during a press conference in Tokyo on May 10, 2012. Sony posted a record full-year loss of 5.7 billion USD, but vowed it would swing back into the black this year as it embarks on a huge restructuring plan. AFP PHOTO/Toru YAMANAKA (Photo credit should read TORU YAMANAKA/AFP/GettyImages)
The sun is reflected on the Sony Corp. logo displayed on the company's headquarters in Tokyo, Japan, on Thursday, Nov. 1, 2012. Sony, Japan's biggest consumer-electronics exporter, unexpectedly posted its seventh straight quarterly loss on falling demand for its TVs as consumers flock to Apple Inc. and Samsung Electronics Co. devices. Photographer: Tomohiro Ohsumi/Bloomberg via Getty Images
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By ELAINE KURTENBACH

TOKYO (AP) - Sony expects its annual loss to swell to $2 billion and has canceled dividends for the first time in more than half a century after writing down the value of its troubled smartphone business.

Citing intense competition, especially from Chinese rivals, Sony said Wednesday it anticipates a net loss of 230 billion yen ($2.15 billion) for the fiscal year that ends March 31, 2015. Its previous forecast was for a 50 billion yen ($466 million) net loss.

For the first time since going public in 1958, the Japanese electronics and entertainment conglomerate canceled dividend payments for the half- and full-year.

"This is the very first time we ever eliminated a dividend," said Sony's president Kazuo Hirai. "For more than 50 years we always paid a dividend. The entire management takes this very seriously."

The company plans to cut staff in its mobile communications business by about 15 percent, or roughly 1,000 people, Hirai said. Details of that plan are to be announced later.

Sony has been trying to reshape its business after years of red ink and has repeatedly promised turnarounds without delivering.

It said the bigger loss for the current fiscal year stems from a lower valuation of its mobile phone business due to weaker than expected sales. The company is recording an "impairment charge" of 180 billion yen ($1.7 billion) in the July-September quarter.

The charge is purely an adjustment to the company's balance sheet, involving no cash, but it reflects that the mobile business is far less valuable and will generate lower profits than previously thought.

The smartphone business has proven particularly tough for Sony. Apple and Samsung dominate at the top end while Chinese and other Asian manufacturers are hogging the market for cheaper phones that are most likely to appeal in fast-growing developing countries.

Hirai said Sony had not managed to stay ahead of sea changes in the industry.

"The Chinese smartphone manufacturers have made great strides and are expanding outside their own market, and this has caused a shift in the pricing," he said. "Meanwhile, Apple and other manufacturers are launching strong, innovative products. The changes are very rapid and dramatic."

Hirai said Sony expects a loss in its mobile business this year, but would return to profit by cutting costs and focusing on higher end devices. It is also positioning itself for future growth in smartphones and mobile technology.

"We have to be in the competitive landscape in the next stage and be ready for that evolution," he said.

Sony intends to leverage its vast archive of music and movies, network services and technology to compete.

"By combining these assets well we can come up with uniquely Sony products," he said.

Looking ahead, Sony plans to concentrate on its "premium lineup" of smartphones and reduce the number of mid-range models that have proven less popular than expected, Hirai said.

Sony plans three Xperia Z3 smartphone and tablet models, with its signature waterproof capabilities, for this fall. For the first time, one of the phones will be available in the U.S., through T-Mobile, at about the same time as the rest of the world, rather than months later.

It also plans a new SmartBand fitness device that will include a small display to show the status of various activities. Its SmartWatch 3 will have GPS capabilities built in, allowing for more accurate tracking of outdoor fitness activities.

The profit warning followed a surprise eightfold jump in Sony's April-June quarterly profit thanks to gains from selling buildings and its stake in a video-game maker.

Sony left its full-year sales forecast unchanged at 7.8 trillion yen ($72.8 billion).

The company reported a 128.4 billion yen loss in the fiscal year that ended March 31.

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