Five questions answered on Sony’s slashing of its full-year profit projections

What has Sony said about its revised forecasts?

Japanese-based Sony has slashed its full-year profit forecast by 40 per cent. We answer five questions on the electronic giants profit falling predictions.

What’s Sony’s revised forecast for its profits?

The company is now anticipating to make a net profit of 30bn yen ($305; £190m) in the financial year to 31 March 2014.

This is down from earlier estimates of 50bn yen.

Why has Sony downgraded is profit estimates?

In the July-to-September quarter Sony’s loss widened from 25 per cent from a year ago to 19.3bn yen.

Its Pictures division was a key factor; it made a considerable loss due to some high profile failures. This particular division which includes movie production and TV shows, recorded an operating loss of 17.8bn yen during the period. This is compared to an operating profit of 7.9bn a year earlier.

What has Sony said about its revised forecasts?

"The current quarter reflects the theatrical underperformance of White House Down, while the previous fiscal year included the strong theatrical performance of the Amazing Spider-Man," the firm said in a statement.

What other problems has Sony had?

Things such as a decline in television licensing revenue due to fewer movies being licensed year-on-year, increased competition and slowing global demand for TVs and a decline in TV prices have all had a detrimental effect on the company.

Sony's TV division posted an operating loss of 9.3bn yen for the three months to the end of September.

The firm said that the division's earnings were hurt after it cut the price of its PlayStation Vita consoles.

Its Game division made an operating loss of 800m yen during the period, compared to an operating profit of 2.3bn yen during the same quarter last year.

What about Sony’s competitors - how are they doing?

Sharp and Panasonic reported profits for the July-to-September quarter.

Panasonic reported a net profit of 61.5bn yen for the period, reversing a loss of 698bn yen during the same period a year ago.

Sharp reported a net profit of 13.6bn yen for the quarter, reversing a loss of 17.9bn yen in the previous three months.

It also raised its full-year profit forecast to 270bn yen in the current financial year, up from its earlier projection of 250bn yen.

Sony has slashed its full-year profit forecast by 40 per cent. Photograph: Getty Images.

Heidi Vella is a features writer for

Photo: Getty Images
Show Hide image

Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.