TOKYO (AP) — Japanese electronics and entertainment company Sony Corp. reports fiscal first quarter earnings Thursday that are expected to reflect a gradual recovery, despite the damage from the March earthquake and an embarrassing online security breach.
WHAT TO WATCH FOR: The aftermath of March 11 quake and tsunami, which destroyed key suppliers in northeastern Japan, is weighing on all Japanese manufacturers, not just Sony.
But the electronics manufacturer, which also has movie and music divisions, is expecting to return to profit for the fiscal year ending March 2012.
Tokyo-based Sony is likely to book a special charge of 14 billion yen ($179 million) to cover costs of customer support, freebie packages, legal costs, lower sales and measures to beef up security after a global security breach affecting more than 100 million online accounts.
Before the disaster, the maker of Vaio laptops, PlayStation game machines and Bravia TVs had expected to return to profit in the fiscal year ended March 31.
WHY IT MATTERS: Even before the disaster, Sony has been battling to regain its image as a global leader in gadgets as over the years consumers increasingly turned to rival offerings such as the iPod and iPhone from Apple Inc., making the Walkman brand a has-been.
Sony has gone through massive cost cuts and restructuring and is hoping to recover in flat-panel TV, gaming and personal computer businesses. But it faces a major challenge because it has fallen behind in liquid-crystal displays for TVs to South Korean manufacturer Samsung Electronics Co.
Sony has lost money in its core TV business for seven years straight despite selling more TVs. A strong yen, which erodes the value of overseas sales, and a decline in product prices are behind the damage, according to Sony.
WHAT’S EXPECTED: A FactSet survey of analysts forecasts Sony to report a 12.5 billion yen profit for the fiscal first quarter.
LAST YEAR’S QUARTER: Sony booked a net profit of 25.7 billion yen for the April-June period last year. Quarterly sales rose 3.8 percent to 1.66 trillion yen.