Sony reports £685m loss, first in 14 years

Hancock and Bond the only heroes in dismal year for Sony
Hancock and Bond the only heroes in dismal year for Sony

A perfect storm of global economic recession, aging hardware and currency fluctuations is battering Sony, causing it to post its first loss in over a decade.

Its full year financial results, released today, make for grim reading, headlined by an incredible £685 million operating loss.

Sales overall were down 13 per cent on the year before, with electronics slumping by 17 per cent, games by 18 per cent and even film sales down by 17 per cent. Much of these losses can be blamed on the yen appreciating against other currencies.

DVD shows long legs

In electronics, unit sales were actually fairly stable. Sony shipped fewer camcorders (6.2 million), cameras (22 million) and DVD recorders (1.2 million) in 2008 than in 2007, but saw increases in Walkman sales (7 million sold), Bravia TVs (15 million) and Vaio PCs (5.8 million). DVD players sold surprisingly well, shipping nearly 10 million players compared to 2007's 8.5 million.

In gaming, sales of PS2 hardware nearly halved, while PSPs crept up to 14 million units and over 10 million PS3s were sold for the first time. Sony expects to sell 15 million PSP and 13 million PS3s in 2009. Games actually lost less money in 2008 than in 2007.

Sony Ericsson proved a further drain on its parent corporation, which it blamed on the global economic downturn and a "less favourable product mix" (in English: rubbish handsets).

Films offer a happy ending

Quantum of Solace, Hancock and Paul Blart: Mall Cop helped Sony Pictures to higher box offices, and to an overall profit of £200 million.

The year ahead doesn't look much better. Sony is expecting to lose a similar amount of profit during 2009, with further decreases in electronics and games sales.

Mark Harris is Senior Research Director at Gartner.