Sony Fights Reputation Damage From Security Breach
Posted by Richard Schissler on Tue, May 31, 2011 @ 11:32 AM
Sony Corp., the Japanese maker of PlayStation 3 video game machines and Bravia flat-panel TVs, reports its fiscal fourth and annual quarter results Thursday. Ahead of the results it has announced it will post a full-year loss after earlier forecasting an annual profit.
WHAT TO WATCH FOR: Sony has been under pressure from plunging sales of flat-panel TVs and other gadgets, and is likely to remain in the red in its TV business for the seventh year straight.
But it faces a new kind of challenge to its reputation after acknowledging a massive security breach affecting more than 100 million online accounts. Tokyo-based Sony was forced to close down its online gaming services last month.
It began restoring its PlayStation Network service in the United States and Europe May 15, mainly for online gaming, chat and music streaming services.
WHY IT MATTERS: As a prized brand, Sony's ability to spring back from the production disruptions set off by the March 11 earthquake and tsunami in Japan is symbolic of the nation's overall recovery.
Sony has lost much of the luster that it gained from pioneering whole sectors such as its Walkman portable music player in the 1980s that catapulted Sony into a global household name.
Nowadays it is struggling against flashier and more efficient rivals, including South Korea's Samsung Electronics Co., from which Sony purchases liquid-crystal displays, a key component in flat-panel TVs.
Sony has also taken a beating in music players and other portable devices to Apple's iPod, iPhone and iPad. Adding to its woes is the strong yen that threatens all major Japanese exporters by eroding their overseas earnings.
Sony, which also has a sprawling entertainment businesses in music, video games and movies, has repeatedly banked on content download services for network-linking TVs and game consoles. But the recent leak of user information is throwing even those ambitions into doubt.
WHAT'S EXPECTED: Sony said Monday it expects a net loss of 260 billion yen ($3.2 billion) for the year ended March 2011, largely due to writing off 360 billion yen ($4.4 billion) related to a tax credit booked in a previous quarter.
LAST YEAR'S QUARTER: Sony posted a net loss of 56.6 billion yen ($608 million) for January-March 2010, smaller than the 165 billion yen loss racked up the same quarter the previous year. It booked a 40.8 billion yen ($439 million) loss the fiscal year ended March 2010, smaller than the previous year's 98.9 billion yen loss — Sony's first annual red ink in 14 years.
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