Sony Posts $3.2 Billion Loss – Sony is No Longer an Industry Leader

Sony Corp will post its third straight annual net loss for the year that ended in March after writing off tax credits. This is the latest in a string of grim headlines on the consumer electronics giant. The maker of PlayStation video games, Vaio computers and Bravia TVs has been battling to recover from a series of security breaches on its networks that negatively affected more than 100 million user accounts. The annual net loss would be Sony's second-largest ever, underscoring the decline of a company once a symbol of Japan's electronic and manufacturing excellence.

I have been skeptical about Sony for a long time. Sony has been overtaken by Apple and other companies," said Yuuki Sakurai, CEO and president of Fukoku Capital Management in Tokyo. "The management is not able to show shareholders the future of the company."

Sony has found itself outmaneuvered by Apple in portable music and various other areas of technology. Samsung Electronics has outmaneuvered Sony in flat-screen TVs and other home theater equipment. Sony has also continuously been outmaneuvered by Nintendo and Microsoft in the videogame market. Playstation 3 is the least successful console ever released by Sony.

Sony had previously forecast a net profit of 70 billion yen ($857 million) for 2010/11. Stock markets were surprised today when Sony announced a need to update investors with revised estimates ahead of its official earnings report on Thursday. Stock exchange rules in Tokyo require companies to notify investors if estimates for the business year are likely to be more than 30 percent higher or lower than their most recent forecast. Sony said it now expected to post a net loss of 260 billion yen ($3.2 billion), due to a non-cash charge of around 360 billion yen ($4.41 billion) related to Japanese tax credits.

In April, Sony shut down the PlayStation Network worldwide in order to try and repair the biggest problem in the history of the videogame industry. Sony has slowly started to restoring areas of access, but is still working with Japanese government authorities to restore access in that country. Sony said "known costs" for the hacking attacks were estimated at 14 billion yen ($171 million). Sony is targeting the end of May for fully restoring the affected networks; however, as we have already seen, Sony’s estimates cannot be considered without skepticism.

Last week, Sony Chief Executive Howard Stringer aggressively responded to critics saying Sony was too slow to notify consumers once the online hacker attack had been indentified. Howard Stringer stands alongside other Sony executives such as Jack Tretton and Kaz Hirai for behaving selfishly in deceitful ways. Recently, Controversy exposed Sony’s deceitful methods of calculating sales figures in order to minimize negative publicity associated with poor sales and declining market share. While trying to avoid negative publicly from the online hacker attack, Sony allowed loyal consumers to be at high-risk of identity theft and financial theft.

What are your thoughts on this? Do you agree with industry experts saying Sony has been overtaken by foreign competitors such as Apple, Samsung, and LG? One thing is clear; Sony no longer represents any form of symbol of Japanese excellence in the world of electronics. Corporate giants outside of Japan, such as Samsung, LG, and Apple, now characterize themselves as leaders of the electronics industry.