Sony is considering cutting its earnings outlook for the year as it copes with a massive recall of laptop computer batteries and price pressure on a number of products.
The Tokyo-based electronics maker, which is due to announce its half-year earnings next week, said it is considering various factors that could cause it to reduce its profits forecast.
At present it expects both its operating and net profit to be ¥130 billion ($1.1 billion) for the fiscal year ending 31 March 2007. The forecast represents a 32 per cent drop in operating profit and a 5 per cent rise in net profit against last year.
Sony is battling with a number of issues not least of which is a still-widening recall of laptop computer batteries. In late August, when Dell and Apple issued recalls for a total of 5.9 million batteries, Sony said it would have to bear costs of between ¥20 billion and ¥30 billion. In late September Sony launched a wider battery replacement program, and the number of batteries being recalled or offered for replacement is more than 8 million, but Sony has yet to provide an update of the likely cost.
On Tuesday Sony said for the first time that it would recall batteries used in its own Vaio machines. The company will exchange around 90,000 batteries used in Vaio laptops sold in Japan and China.
Losses associated with the launch of its PlayStation 3 console this year are also likely to rise after Sony said it would reduce the price of the cheaper of the two consoles in Japan to ¥49,800 from ¥62,790. It made the unusual move to cut a product's price before launch after complaints that the console is too expensive. Sony had earlier said it expected PlayStation 3 start-up costs to be around ¥100 billion.
Sony and its competitors are also battling falling consumer electronics prices in several other important business sectors including flat-panel TVs, digital music players and video cameras.