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Quick Hits: Sony Takes First Loss Since 1995


Brief scrutiny of today's headlines.

Consumers aren't buying - and Sony's (SNE) hurting.

The maker of consumer electronics may report a $1.1 billion operating loss for the fiscal year ending in March - the first loss since 1995.

The Nikkei, Japan's leading business daily, blames weak sales of digital cameras, flat-panel TVs, video games and other gizmos for Sony's sagging revenue.

In 1995, Sony posted an operating loss after the poor performance of its movie division, but sales of consumer electronics remained strong. Now, Sony's core business is struggling, reflecting the worldwide economic slowdown.

It may take deeper job cuts and slashing research and development to get Sony back on track in the short term. But that could leave the company with stale products when the economy rebounds.

Last month, Sony announced that it would cut about 8,000 jobs, or 4% of its workforce, and close some plants. Sony also shuttered its robotics division and halted work on plasma displays.

Sony may have lucked out because the European Union is considering a ban on plasma TV because they're energy hogs. Critics have called plasma TV the SUVs or 4x4s of the living room.

The Sony Walkman and PlayStation once underscored the company's standing as an innovator. But the company's image has been hit hard by Apple's (AAPL) iPod and even Microsoft's (MSFT) game console.

All this suggests Sony's road back will be longer and tougher than expected.
No positions in stocks mentioned.
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