Sony is Forecasting a Loss of $1.1 Billion, will cut 5,000 Jobs

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Sony has announced that for the fiscal year ending on March 31st, 2014, the firm is expecting a loss of $1.1 billion. Sony CEO Kazuo Hairai will be cutting another 5,000 jobs, as he restructures the companies Vaio PC and Television business. 

Bloomberg is reporting that Sony’s TV and Vaio PC business is causing serious losses for the firm. Add into that R&D costs of the PS4 and struggles of the PS Vita in the market, and that paints the picture of why Sony is charting this much of a loss on their forecast.

More details and analysis can be found on Bloomberg.

Thanks TheBowelsOfTrogdor for the tip!

 

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100 Responses to Sony is Forecasting a Loss of $1.1 Billion, will cut 5,000 Jobs

  1. […] them nearly depleted of all confidence in the CEO. Aside from Sony selling two corporate buildings, firing 5000 people; that of which includes 1000 people from two thirds of all of Sony's retail chains, which are now […]

  2. […] and CEO Kaz Hairai stated the firm will cut 5,000 jobs after losing 1.1 billion dollars in their last projected forecast. Now we are starting to see the layoffs happening. Sony has announced they will close down 20 […]

  3. jtz says:

    If it were Nintendo who lost 1.1 it would have been way more articles.

  4. […] announced they are projecting a $1.1 billion loss by the fiscal year ending in March of 2014. This has caused some of the more prominent share […]

  5. Mario_U says:

    With their cost-cutting measures, I kinda knew that their PS4 sales weren't enough to bolster the company's fortunes as seen in their recent decisions to sell off their computer brand, and spin off their TV division. They need their other divisions to succeed if they wish to be profitable (and not just their game division) and those two particular divisions (computers and TVs) haven't been doing that.

    Don't be surprised if they slowly end up spinning/selling off their movie division next, their mobile division and then their music division, and inevitably, their games division if they face similar losses in the future.

  6. AntiActivity says:

    Forgot to link this here, Sony has already started their cost cutting measures. The company is officially leaving the eBook business in North America, and diverting all their current customer information over to Kobo: http://finance.yahoo.com/news/sony-exits-north-am

  7. Metalheadgamer8 says:

    Man, this doesn't look good.

  8. rubix8702 says:

    I wish I could say I was surprised, but in all honesty I'm not. Sony for the longest time has rested on its laurels since being deemed the "King of Electronics" in the 1990's. A lot of this has to do with the culture of the Sony upper echelon. Ever since the company's inception, it has been about the engineers, which for the time, was unheard of. However, the philosophy worked in that the creators understood the financial aspect of business.

    The founders of Sony were engineers Masaru Ibuka and Akito Morita, and they wanted to give power back to the makers instead of the financial CEOs. It worked for a good 30-40 years because the founders understood the importance of a quality product, but also making sure there was the money there to sustain it.
    Fast forward to the 1990's and Sony was the 'it' electronics to have, from speakers to headphones, from TV's to the extremely famous Walkman and Playstation, Sony was 'the man' so to speak (no Aloe Blacc voice overtones included lol).

    Anyway, the firm continued its culture of creation when in early 2000's there was a dynamic shift in how business was done. Instead of being first, and creating the 'next big thing', Sony rested on the laurels of its name. The attitude of "We're the best because we're Sony!" purveyed. For a time it worked, but the reason it worked was because of the quality of the past. However, the engineers who were making decisions were forgetting one crucial factor, they were forgetting to count the financial cost.

    In fact, the power structure had become so lopsided in its decision making, that the engineers seemed to only care about being the next creator of 'The Walkman' or be the next engineer who created 'The Playstation'. The financial CEO's who were hired to create budgets and plans for products were completely overshadowed. The engineers were more focused on creating what the next hot item would be instead of seeing if it were feasible for production or not. Thus this created a market flooded with useless goods that no one wanted, needed, or cared for. It also didn't help the Samsaung basically took over as the top dog in terms of TV's, phones, insurance, and computers around 2004.

    In short Sony has been in trouble for years, that's why TRUE investors knows what's going on with the company and have allotted them the junk bond status. Sony's debt to profit ration is near even, last time I checked their company as a whole had a 16.49 billion dollar market share, the debt incurred by lack of sales and R&D is 14.72 billion dollars overall for everything. If Sony were to pay off its debts 97% of the company would have to be sold. It isn't any wonder why they have to fired people to make a profit, or to stay afloat. Just to put this into perspective, in 2000 Sony's market share was 100 billion dollars and their debts at the time were around 10-12 billion dollars.

    The biggest need for change with Sony is the engineers making the decisions to come back to reality. They are driving the company into the ground with their arrogance, and they don't seem to care. Hopefully, they will soon before their company is completely gone, but given this news of 5000 layoffs, I highly doubt it.

    That's all.
    http://www.marketwatch.com/investing/stock/sne
    http://www.macroaxis.com/invest/ratioCompare/SNE-
    http://www.bloomberg.com/news/2011-12-13/stringer

  9. Alex Wolfheart says:

    Maybe if Sony kicks the bucket Sega could come back from the dead.

  10. sony says:

    The thing is, as much playstation is one of their profitable divisions, gaming isn't their largest division. That's why it needs other divisions to do well too.

    Anyway if Sony declines further Sony is more likely to spin Sony Computer Entertainment into its own company than going 3rd party selling.

  11. JTurner82 says:

    So Sony is losing money — again — and firing people, and yet nobody is calling them out on it? Meanwhile Nintendo and co refuse to fire their employees and instead keep trudging along and everyone is calling for their death? SERIOUSLY???

    The gaming media really HAS gone to hell. At least in America.

  12. tagrush says:

    So… Is this how it's gonna go down to?

    Sony selling all their businesses to save their PS division?

  13. Jamie_Bworth says:

    But…but…but…Sony's fine! They should buy Nintendo!

  14. Freelancepimp says:

    Does anyone have any hard numbers on the "playstation "division? We know it sold well, but what about sales vs operating expenses and all of that?

  15. Dgander says:

    Very shitty and unstable company. This is only a temporary fix for an inevitable downfall. Mark my words they will be going third party very soon with PS Now. I feel sorry for PS4 owners already, imagine when they finally drop the Playstation brand in the near future.

    • Saleem Rasul says:

      The conspiracy theorist in me is thinking that this is part of Nintendo's M&A plan.
      Release new console early - Check
      Force Sony to react and release their own new console in competition with the PS3 - Check
      Cause Sony to over extend and "acquire" them - DUNDUNDUUUUN

      Seriously though I only really feel sorry for the guys loosing their jobs.

      • DePapier says:

        I was the first one this website calling for Sony titles to end up on the Wii U Virtual Console. Don't you go there taking my prediction. ;)

        • Rpx says:

          Remind me why would Nintendo wants to acquire Sony and be responsible for most of their liabilities as well?

          Sony is likely use the corporate bankruptcy protection then undermine restructuring.

          • Saleem Rasul says:

            If Nintendo is worth more then Sony as a whole, doesnt that mean Nintendo is worth more then the PS division?

            Technically if Sony had sold off all their other divisions then it would probably be within Nintendo's reach to buy the PS arm if nothing else. They wouldnt have to buy the liability then.

            Of course this is all conspiracy theory - but if it did happen I foresee a higher probability of Sony selling PS to Nintendo rather then MS or anyone else since they are both Japanese.

  16. dgc4gamers says:

    I've said it before, Sony is the bastard child of Sega and right now they are in the Dreamcast stage. And if they don't do something big soon, they could be in a lot of trouble as a corporation.

  17. sony says:

    http://www.neogaf.com/forum/showpost.php?p=998194
    http://www.neogaf.com/forum/showpost.php?p=998235

    Ouch.

    Many in Neogaf are actually thinking this is a good thing. Cut out the deadweight while PS4 division is doing better. BEtter for gaming.

    However these two posts. Ouch. Sony won't go away but we'll see some drastic things. Apparently Kaz is a not good Ceo who is reactive not proactive.
    "Market wants SOny to exit electronically"

    There is even talks of Sony for the growing Japan's defense military industry.

  18. darkgamer001 says:

    Ugh…I was just on the Nintendo facebook community that I created, where yet another 'How Nintendo can be saved article' was posted (which included a Mario on iphones and games on other platforms as ideas =___=)
    Yep, it's Nintendo that is in trouble and needs saving folks, not Sony. It's the company that's been around since 1889 that needs saving….the company that recently sold over 100 million Wiis, 150 million DS and 40 million 3DS units that need saving…..and not Sony

    sigh…

  19. sony says:

    Once sony trims out it unprofitable divisions (which are actually several) or at least its worse ones, it can return to profitability again.

    PS4 will sooner or later break even anyway eventually.

    Although its pretty sad how Sony is forecasting 1.1 billion dollars. Kaz Hirai is on a clock too.

  20. ZainreFang says:

    IGN's Headline: "Strong PS4 Sales Boost Sony Game Division Profit"

    That is just…. Wow.

    • sony says:

      Technically that isn't false. If you look at it in terms of game division only yes.

      But its still shortsighted.

    • Nes Collie says:

      Did you see the phrase "Gaming Division"? lol

      Why would IGN report of Sony's losses in the TV, PC, and mobile device markets?

      • Shadao says:

        Because you want to know the full status of the parent company that created and sustained the Gaming Division. Like a branch on a tree, the PS branch will not survive if the rest of the tree (Sony) is cut down. We've seen Sony managed to weather out the heavy losses of the PS3 (which wiped out all of their profits from the PS2) thanks to the money made from the other divisions. That advantage was a double-edged sword. Now many of these divisions are actually bleeding money, meaning that the PS4 could not afford to take another loss. While that didn't happen to the PS4, the PS4 is unlikely to offset the heavy losses Sony has made from its other division due to being "a small branch". And if Sony loses too much money from the other divisions, they might go bankrupt or reduce much of their spending to keep afloat. And that will affect the status of the Sony's Gaming Division and the PS4.

        Focusing on the gaming division alone and ignoring the losses from the other fronts is very stupid decision for any analysts focusing on the future of game industry, like an environmentalist just monitoring the number of deers to judge the health of a complex ecosystem. If you don't take account of factors and events outside, don't look surprise if a seemly healthy division suddenly goes into a total collapse without warning.

  21. tjb says:

    I am not surprised at all. The ps4 will not save sony. I don't see them turning their tv or pc division around. I feel the biggest problem is not in the brand. its in the image. Their stock is going to fall a lot before the end of the year as they try to address TV and PC division. this is going to be a huge investment and if it doesn't pay off. well lets just say crap rolls downhill.Quality will be the next thing affected.

  22. mdx says:

    Maybe Sony should just go back to their day job and sell insurance, and give up this dream of becoming a star.

  23. Link says:

    " PS4 sales do the business for Sony
    Sells Vaio, splits out TV business, axes 5000 staff. "

    This is seriously the headline for this topic on Euroclickbaitgamer. Just casually mention in the subtitle that they're laying off a whopping 5000 employees. The tone of the article is positive too, not mentioning the amount of forecasted loss and being totally surprised that they're not predicting a profit instead. Meanwhile the general reaction when Nintendo changed their forecast from a profit to a much smaller loss was "Oh yeah well obviously they're not making a profit since the Wii U is failing and the 3DS can't save them."

    This quote is also golden: "Kaz has more more work to do, then." Yep he does, just like Iwata has plenty of work to do but let's call for Iwata's head while we're at it because it makes so much sense.

  24. King_Sparkticle says:

    I won't even bother checking other websites for coverage over this simply because I know it's non-existent.

    Sony loses 1.1billion + fires 5k people = not even a big enough deal for it to be reported.

    Super Mario 3D World sells 2k less than Knack (which released earlier) for one week in the UK (the dudebro country, no offense) = Nintendo is dying, there's no hope for Nintendo. Mario is going out of business. Nintendo should just go third party or solely smartphone.

    Man, F*** this industry.

    • donzaloog says:

      People need to start calling out sites like IGN for this BS. If they're not going to report when Sony/MS mess up, they have no right to talk about Nintendo.

      • *NormalGamer* says:

        They ‘all’ need to be called out, one way or another; do they really think that twisting bad news into positive news will really make them happy? Practices like this are bad for the industry and can derail us from knowing the real truth of the matter.

      • Nes Collie says:

        IGN doesn't report on companies losses from lack of TV sales or mobile devices. IGN may however report that PS4 sales are above expectations. Would you like that?

        You realize Sony is a big company don't you? The gaming industry is a very small part of thier operation. Good grief.

        • King_Sparkticle says:

          Wow…you're completely missing the point. COMPLETELY missing the point.

          This affects their gaming division, too. That's a FACT. Protecting any site over not reporting this is like protecting Hitler for not murdering people (bad example, I know). It just doesn't work.

          Don't think that this is a "meh" loss, and Sony will happily shake it off tomorrow and will go on smoking their Jack Daniels, because they won't. This is some major losses, and it definitely puts Sony as a whole in a LOT of trouble. And this INCLUDES the gaming division.

          Don't act smart if you're trying to say something dumb.

        • Saleem Rasul says:

          Sorry but this is too funny. A loss is a loss and while this might be attributed to other bussiness arms of Sony it hurts the whole. Kinda like how when you have a toothache the rest of you suffers as well.

        • Shadao says:

          If that is the case, then wouldn't the losses in TV sales and mobile device (a much larger market) negate the success of the PS4 as a whole to Sony? And what would happen to the PS4 and PS brand, if Sony were to go bankrupt from its heavy losses from other media divisions? People said the PS3 was not the end for the PS brand because of the money Sony's other divisions made that keeps the company afloat from the costly loss of the PS3. Now there is a money problem going on with the other divisions, and yet the media treats PS4's success like it will negate such losses despite the being "in your words" a very small part of their operation.

    • MortyF1 says:

      Look at IGN in the PS4 section :D

      Strong PS4 Sales Boost Sony Game Division Profit (With Large bolded text)
      Though plans are afoot to sell its PC business and layoff 5,000 employees. (Small unseeble text)

  25. koopzilla says:

    Ok, if the gaming media ia so unbiased, I fully expect them to guve Sony the constant barrage of shit that Nintendo got for 2 or 3 weeks straight. I expect Pachter calling for Sony to abandon the PS4 and Vita, and put their games on the X-Bone, Wii U, and Smart phones. I expect calls for the resignation of Sony's president.

    Of course, the media is not unbiased and I expect none of this to happen.

    I have a solution for their TV problem, make a higher quality product and price it competitively. Every Sony home electronic product I have ever had, TV's, VCR's, DVD players, have quit working within a year and a half. Everyone I know who has owned a Sony TV has had it quit working. They are inferior products and they charge out the ass because it says Sony on it. The name alone will only take you so far. I won't touch their products because I have been burned so many times. I haven't had any problems with Playstations, and I have a car stereo that has held up really well though. As for their computers, they are overpriced as well, and I have never known a single person that has owned one.

    • Nes Collie says:

      Did you even read the article? The losses come from TV and mobile devices.

      PS4 sales are above expectations and forecasts. http://www.gamezone.com/news/2014/02/06/sony-ps4-

      • timg57867 says:

        Did YOU even read his comment?

        The first part is sarcasm and the second part talks about how the TV division is in tatters just as mentioned in the story. Even says that their Playstation consoles are one of the few things he HASN'T had problems with. You need to take a nice big seat buddy. Being a smart aleck is bad enough. It's even worse when you don't do it right. SMH…

        Edit: Also, mentioning the PS4's successful launch is kinda pointless considering how Sony's STILL having these losses, even with it's launch.

      • Shadao says:

        Didn't you even read his post. He did. And he offered a solution to their TV problem in full length. He never said that losses came from the PS4.

  26. DePapier says:

    "Sony has been selling assets to generate one-time profit and said last month it began cutting jobs at its Hollywood film studio as part of $250 million in cost reductions."

    NOOOOOO, I WANT MY JAMES BOND 007!!!!!!!!! :'(

  27. DePapier says:

    "Billionaire Daniel Loeb’s Third Point LLC, which pushed for a spinoff of a portion of Sony’s entertainment unit last year, said in a Jan. 21 letter to investors that Sony needs to restructure its TV and PC businesses."

    So a billionaire investor rallied other investors in the making of a decision that Sony is now putting to effect.

  28. DePapier says:

    "Sony will sell its personal computer business "

    So that stuff on VAIO actually wasn't a rumor.

  29. Kage says:

    I don't want to be one of those 'Sony d00med' fanboys… But this news isn't exactly helping matters…

  30. *NormalGamer* says:

    You know your company isn’t doing well financially when you’re cutting 5,000 jobs.

    I wish those that lost their jobs luck.

  31. MortyF1 says:

    I like Nintendo. They refuse to fire people. Instead they cut their own salary. I respect Iwata and Miyamoto so much :D

  32. Zen_Gamer says:

    I know that Sony is comprised of many different businesses and as such would have a massive workforce and all that jazz, but if you take into consideration that those 5000 employees that are being axed would nearly equal Nintendo's ENTIRE internal working force - it's, well, staggering to say the least. I wish those unfortunate persons luck in their future endeavors.

    Nintendo - Employees, 5,195 internal, 1,988 external (as of September 30, 2013).

    Sony has really stepped in it this time and while I sincerely do not wish for their departure from the console scene (there is a better candidate for that role IMO) I just don't see them doing the proverbial 180 into success and stability. It pains me to say it, really it does, but the snowball effect is well underway here…

    • UncannyOmninaut says:

      HOLY! It didn't even occur to me that the amount of layoffs equal almost the totality of Nintendo's workforce. Yeah, 5000 jobs that is a freaking huge number of people being let go, its insane really!

  33. Wow says:

    I can already see the cries of haters… but this is what happen when you hide info behind a screen of lies and blame Nintendo for not doin it too!

  34. Roosmella says:

    EDIT !!! the word picture in the above article is spelled incorrectly.

  35. UncannyOmninaut says:

    Ouch!

    1.1 billion and 5000 jobs! It sucks for those 5000 people that will lose their jobs.

    • titangamecube says:

      Im starting to believe that the 4.2 million PS4's sold is not really true.

      • Furious Francis says:

        No its true, Sony’s other business’ are holding down the PlayStation brand…but the other businesses are the reason why the PS brand is still here so…..it goes both ways

        • UncannyOmninaut says:

          Is Sony making a profit on the PS4 yet or are they still paying off operational costs?

          • timg57867 says:

            Highly doubt it has profited. The Wii U hardware only costs $228 to make and it's costing Nintendo money at $300. No way PS4, with its 8GB GPU and other parts can profit of it at launch. Doesn't help that the launch buyers are done buying launch games and that most of the games bought are third party. And don't forget marketing costs either.

          • Seiren says:

            WiiU hardware doesnt cost 228$ first of all

          • timg57867 says:

            Yeah it does. CNN did an official breakdown:
            http://www.gengame.net/2013/03/cnn-estimates-the-

            So even though the Wii U itself only costs that much to make, Nintendo still has to take a loss even selling it for $300.

          • Seiren says:

            No it doesnt. CNN cant do a proper breakdown on customized hardware

          • timg57867 says:

            Well, this breakdown was posted by a lot of sites so it's not like Nintendo didn't see it and I know they never actually denied this. They probably aren't far off. Besides, while it may not be "official" since it's not Nintendo doing it, I don't see why you can't deduce the value of parts themselves, even when it is customized. Sure, they can't deduce how much money it actually takes to make each Wii U, but the parts are perfectly deducible.

          • Kaloi2 says:

            So basically what you're saying is that Nintendo is doomed? LOL

  36. timg57867 says:

    Can't imagine their investors being pleased to see that.

  37. donzaloog says:

    Once again I expect our on point and unbiased gaming media to report this on all of their front pages.

  38. coldblooder says:

    And yet, no one will report it…

  39. Saleem Rasul says:

    So does this mean Sony is doomed?

    • King_Sparkticle says:

      Obviously not, these news blatantly spell out "Nintendo is going to die in 2 month", you stupid Nintendof** fanboy drone scum!

      • Mirror says:

        Who's the fanboy here? LOL

        • hardensoul72 says:

          Same with IGN cherry picking good news for headline
          "Strong PS4 Sales Boost Sony Game Division Profit"

          Game informer also
          "Sony’s Gaming Business Sees Revenue, Operating Income Jump Over Last Year"

          Polygon
          "Sony's games arm revenue booms by 64 percent with PS4 sales'

          Kotaku no mention of 1.1 billion loss forecast
          "Sony Is Selling Off Its Vaio PC Business"

          Gamespot no mention of 1.1 billion loss forecast (with 2 articles)
          "Sony selling PC business, reforming TV unit, and laying off 5,000 people'
          "PS4 helps Sony's game division rise, but PS3 sales see "significant decrease""

          • Shadowkirby12 says:

            Wow. I'm so suprised at how unbiased all these major news sites are, I mean just look at the number articles actually reporting that Sony is forecasting a 1.1 billion loss :D

          • Link says:

            I don't feel like checking other websites but at least there are a fair amount of comments calling IGN out over this.

          • RicardJulianti says:

            Came here to say this^

            Just about every other comment on that article is someone calling IGN out on not even mentioning the losses they are projecting. Feels good to have them get called out. When I do it, mods jump down my throat and get REALLY defensive…

          • AntiActivity says:

            Not surprised at all, even sites like MCV, Gamasutra, and Games Industry are hiding this info with an upbeat header about the PS4's sales, while the job cuts are a small blurb.

            Meanwhile idiotic sites like Motley Fool has been releasing daily articles attacking Nintendo, and I'm not even joking about the daily part… :/

          • hardensoul72 says:

            I've been boycotting IGN for awhile until today and I just wanted to see what they will post and they don't disappoint. As expected they downplayed Sony's troubles. Just checked again and they changed their headline to this! Seriously the bias! I'm done never going there ever again!

            "Sony Financials Reveal Rise in Profit, PC Business Sale"

          • RicardJulianti says:

            I haven't even been actively boycotting them….I just completely ignored them. Pretty easy to do, haha.

          • hardensoul72 says:

            True…can't spell ignore without IGN………

          • DePapier says:

            Same here. I might even forget about that website in a couple of months.

    • TsUaS says:

      Come on man. Quit living in that alternate reality of yours. You know that it means Sony is the greatest ever and that they are the future. That the Nintendoomed train will be arriving this year to pick up Iwata-san and company when Nintendo discontinues the Wii U and goes third party and works exclusively on the PS4.*

      *Disclaimer: Twas sarcasm people…

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