Sony shares drop steeply on loss warning

TOKYO (AFP) - Sony shares dropped nearly 7 per cent Thursday morning as investors reacted to a warning from the Japanese electronics giant that it would remain in the red for another year after it booked a US$1.26 billion (S$1.58 billion) annual loss.

In late morning trade, the Tokyo-listed stock fell to 1,682 yen, down 6.81 per cent, on the back of Wednesday's announcement, which aggravated concerns about a turnaround in Sony's hard-hit consumer electronics division.

Sony announced just after markets closed on Wednesday that costs tied to its exit from the personal computer business - part of a wider restructuring - were largely to blame for its woeful bottom line.

Sony posted a full-year net loss of 128.37 billion yen and said it expected to lose 50 billion yen in the current fiscal year to March 2015, despite seeing losses narrow in its embattled television business.

The announcement came a day after Sony said it would not pay bonuses to senior executives for the third straight year.

Earlier this month, the company said it would lose more than the 110 billion yen shortfall it had forecast just three months ago, when it announced 5,000 job cuts in its struggling computer and television units.

Sony President Kazuo Hirai has led a sweeping restructuring, including liquidating assets that saw the US$1 billion sale of the firm's Manhattan headquarters, in a bid to resuscitate the once world-beating company.

After suffering four years of losses, Sony crept back into the black in the previous fiscal year - although that was mostly due to asset sales and a weak yen, which inflated repatriated profits from business overseas.

Last week, the firm said it would close its ebook Reader Store in Europe and Australia following a similar pullout in North America.

It is also selling properties at a prestigious Tokyo site where Sony had its headquarters for six decades.

Hirai has repeatedly shrugged off pleas to abandon the still-ailing television unit, which he insists remains central to Sony's core business.

Japanese manufacturers have suffered badly in their TV divisions as razor-thin profit margins and fierce overseas competition weigh on earnings.