The share price of Sony dropped heavily on the back of its latest financial results, which include a forecast that the company is going to make a loss for the current fiscal year.
Sony admitted that it will be 2015 until the company is able to return to profitability, with investors responding negatively to the news. Stocks fell by seven per cent after the announcement was made by the Japanese electronics firm before ending the day 6.46 per cent lower.
Due to the weak results, Sony executives confirmed they will not be taking their bonuses for this year, but this was not enough to convince investors that the company has a bright future.
Towards the end of last year, Sony released its latest games console the PlayStation 4, but many industry commentators have suggested sales of the next-generation machine have not been as high as expected.
In a statement, Sony reported a loss of 125 billion yen (£732 million) for the year to March and the company confirmed it is likely to make a loss of 50 billion yen for the current fiscal year and this would be the sixth year in the last seven that the company has failed to turn a profit.
Chief financial officer at Sony Kenichiro Yoshida stated that in response to the weak financial situation of the company, the firm is going to continue to move out of the markets in which it is not performing well enough, which includes the television sector.
"In previous years the restructuring was mostly within business units and in manufacturing," he said on an earnings call yesterday (May 14th). "This time the difference is that we are quitting businesses entirely.
Competition across the electronics sector over the last few years has forced Sony away from leading the market for products such as televisions, with companies such as Samsung among those to have usurped the Japanese firm.
Sony stated that one of the reasons for the high loss in the year to the end of March was the large costs of exiting its struggling PC business.
Learn about the Asian markets and CFD trading at City Index
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.