Sony Stocks Rise Despite Loss Forecast

May 24, 2011
Company predicts losses of $3.2 billion by the end of the year.

Sony shares closed higher Tuesday despite the company forecasting a $3.2 billion annual loss as it looks to recover from the impact of Japan's biggest recorded earthquake as well as huge hacking attacks.

Its shares opened lower but ended up 2.66 percent at 2,270 yen.

"With the numbers out now, the market largely thinks the worst is over," said Yoshihiro Okumura, general manager of research at Chibagin Asset Management.

The expected third-straight annual loss for Sony comes as it tries to recover from the impact of the March 11 quake and tsunami and a massive online hacking attack that compromised millions of users of its network services.

In a preliminary earnings statement Monday, it revised February's forecast for a 70 billion yen net profit for the year ended March to a net annual loss of 260 billion yen ($3.2 billion).

It cited a 360 billion yen non-cash charge set aside for deferred tax assets, illustrating its reduced expectations for taxable profits for the year. The firm, which is due to report its full earnings on Thursday, added that it expects to return to profitability in the current year.

The maker of PlayStation consoles and Bravia televisions was forced to shutter plants after the disasters battered supply chains and damaged facilities.

Before the March 11 disasters, Sony under chief executive and president Howard Stringer moved to streamline operations and cut costs to slim down the sprawling group, which was battered by the global downturn.

The electronics giant has been forced to undergo major restructuring -- slashing thousands of jobs, selling facilities and turning to suppliers for parts -- after seeing losses pile up as the financial crisis hit demand.

Casting a further shadow are recent cyber attacks involving the theft of personal data including names, passwords and addresses from more than 100 million accounts on its PlayStation Network and Sony Online Entertainment services.

Sony shut down the PlayStation Network and Qriocity services on April 20.

The company has said it cannot rule out that millions of credit card numbers may have been compromised.

On Monday it said the data breach will result in at least a $170 million hit in "currently known costs" to operating profit this financial year in terms of insurance and damages.

Copyright by Agence France-Presse, 2011

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