The song says that “there may be trouble ahead,” but for Sony the lyrics to this song are “there will certainly be trouble ahead.” As anticipated Sony has cut its smartphones sales forecast from 43 million units to 41 million units for its current financial year, which runs from April 2014 to March 2015. A cut of two million is significant, but what you need to know is that the 43 million unit forecast was itself a reduction from an original forecast of 50 million units.
When Sony posted a net loss of over $1 billion for its 2013-2014 financial year, the company said it would sell some 50 million smartphones from April 2014 to March 2015. Six months later and that figure has been drastically reduced. Let’s hope that Sony doesn’t need to revised that forecast again, come the end of December.
Although Sony's overall sales increased by 7.2% to $17.4 billion, the company posted a net loss of $1.2 billion.
The new sales forecast comes after Sony reported a huge loss for its second quarter which ended September 30th. Although Sony’s overall sales increased by 7.2% to $17.4 billion, the company posted a net loss of $1.2 billion. While the Sony PlayStation 4 helped boost the sales, the revaluation of its mobile unit meant that the company had to include a one time charge of $1.6 billion for the decrease in value of its mobile business.
The $1.2 billion net loss translates into an operating loss of $785 million and is in stark contrast to the $124 million operating profit for the same quarter of the previous fiscal year. But the execs at Sony aren’t just sitting around crying about the company’s problems. During Q2 Sony increased its marketing expenses, and its research and development expenses, in order to expand sales channels. Which is a good move as there are some key markets where Sony needs to boost its sales, most notably in the USA.
Sony is a household name in the USA. However in mobile, it has struggled to make inroads. For example, Sony’s current flagship, the Xperia Z3, is only available from T-Mobile or as a unlocked device (at the full retail price, without any subsidies). Flagship (i.e. expensive) phones are hard to sell without carrier support. Sony is starting to address this, and earlier this month it announced the new Sony Xperia Z3v, which will sell exclusively on Verizon.
There have also been some changes at the top level of management. As we reported yesterday, Hiroki Totok will replace Kunimasa Suzuki as the head of Sony’s smartphone business. The change will take place in a couple of weeks time, on November 16th.
What do you think? What do you like or dislike about Sony’s smartphones?