Sony, Sharp post losses; Nintendo loses steam

Written by Reuters | Updated: Aug 1 2009, 04:55am hrs
Sony and Sharp's third straight quarters of losses underscore the challenges they face in flat TV market as they struggle to compete with Samsung Electronics and other South Korean rivals benefiting from a weaker won. Nintendo Co Ltd reported a sharp fall in quarterly profit as sales of its Wii game console lost some steam and the stronger yen took a toll. It reiterated its forecast for profit to fall for the first time in four years. Sony is struggling to keep up with Samsung in LCD TVs and has been outmatched by Nintendo in video games.

In the portable music player market, it trails Apple's iPod, while its cellphone venture with Ericsson has been mired in the red. Sony said on Thursday it believes it is necessary to extend some form of financial support to the struggling joint venture.

Sony is making changes to adapt to the environment but it still seems to be having trouble keeping up and perhaps should have been a bit more aggressive about cost-cutting, said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management. To help bolster its loss-making TV operations, Sony said on Thursday it would spend about 68 billion yen ($715 million) by April 2011 to take a one-third stake in a joint venture with Sharp to jointly produce and sell cost-competitive LCD panels. Sony's operating loss came in at 25.7 billion yen in April-June, down from a profit of 73.44 billion a year earlier, and smaller than the average 103.1 billion yen loss forecast by five analysts.

Sony kept its operating loss forecast of 110 billion yen for the year to March 31, 2010 even though its operating loss for the latest quarter was more than 100 billion yen smaller than it had originally projected due to a softer-than-expected yen and milder price falls than anticipated. The forecast is about half the loss it racked up a year ago, and compares with the consensus of 117.7 billion yen loss in a Reuters poll of 19 analysts.

We managed to sell TVs, digital cameras and camcorders without big price cuts in the first quarter. But we see fierce price battle looming up ahead, Sony Chief Financial Officer Nobuyuki Oneda told a news conference. It would be too optimistic to raise full-year guidance at this point.

Nintendo, locked in a three-way battle with Microsoft Corp and Sony in the game industry, earned 40.4 billion yen in operating profit in April-June, down from 119.2 billion yen a year earlier.

Sharp posted a quarterly operating loss of 26.1 billion yen, against a 36.4 billion yen profit a year earlier.