Sony reported a net loss for the three month period from April to June as the company dealt with unfavorable exchange rates, cut-throat competition in the consumer electronics business, and a hacking attack on its online gaming network.
The consumer electronics giant posted a net loss of ¥15.5 billion (US$191 million) for the quarter against a profit of ¥25.7 billion in the same period of 2010. Sales and operating revenue dropped 10 percent to just under ¥1.5 trillion.
Sales in Sony's two primary business units slumped and the company downgraded its outlook for the year to March 2012.
The consumer products and services division, which includes Sony's Bravia LCD TV, PlayStation and Vaio laptop computer operations, registered an 18 percent drop in sales compared to the same period in 2010, while the professional devices division, which includes Sony's components business, saw sales fall 16.5 percent.
Sony blamed tough competition in the LCD television market for pushing down prices and squeezing profits, and said sales of video cameras also fell due to the market shrinking.
Sony sold 4.9 million Bravia TVs in the quarter, a drop of 200,000 on the same period in 2010, but expects bigger drops in the coming quarters. The company slashed its 12-month TV sales forecast from 27 million units to 22 million units.
That would put sales on par with those achieved last year, and will likely be a disappointment for Sony as the company has been trying hard to boost sales and claim a larger share of the market.
Component sales also fell due to disruptions in manufacturing operations caused by the March 11 earthquake and tsunami that hit Japan. Sony was forced to close several of its factories because of damage sustained in the twin disasters, and that reduced its overall production. While sales were hit, Sony said the majority of the costs associated with repairing the factories will be covered by insurance.
At least part of the costs incurred during the quarter related to an April hack on Sony's PlayStation Network and Qriocity online services.
The attack forced Sony to close both networks while it rebuilt cyber defense systems. In all, it took two and a half months for the full resumption of service. Sony previously said it expects the security and subsequent customer goodwill measures will cost it about ¥14 billion.
Sony's gaming division saw 1.8 million PlayStation 3 consoles sold during the quarter, down from 2.4 million a year earlier. PlayStation Portable sales were also 1.8 million, a jump of 600,000 units from the same period in 2010.
Sony plans to launch a new portable gaming device called the PlayStation Vita later this year.
For its fiscal year from April to March 2012, Sony reduced its expectations for both sales and profits.
In May, Sony said it was hoping to achieve sales of ¥7.5 trillion, and a net profit of ¥80 billion in the current financial year. Those targets have now been cut to ¥7.2 trillion and ¥60 billion respectively.
The revised net profit forecast is still much better than Sony achieved In the financial year to March 2011, when it reported a net loss of ¥260 billion on sales of ¥7.2 trillion.