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Sony issues profits warning after £1bn mobile write-down
Sony has issued a profits warning this morning, after being hit by a 180bn yen (£1bn) impairment charge for its mobile phone division.
The tech giant has forecast a loss of 230bn yen for the year to March 31 – far greater than the 50bn yen loss it was predicting previously. Estimates for an income of 130bn yen for the year have been revised to a 50bn yen loss. It also expects to make an operating loss of 40bn yen instead of the 140bn profit it tipped back in July.
The Japanese firm has written down a 180bn yen charge – “the entire amount of goodwill in the mobile communications segment” in the second quarter of the current financial year.
Sony said:
In light of the historical results and the operating environment surrounding the MC [mobile communications] segment, Sony began a review of its MRP [mid-range plan] for the MC segment in July 2014 and has revised the MRP for the MC segment.
It added:
This new MRP reflects lower expected future cash flows compared to the previous MRP. As a result, Sony determined that the fair value of the MC business has decreased.”
The previous plan was based on “achieving significant sales growth”, the company explained, but this is now not expected to materialise because of “the significant change in the market and competitive environment of the mobile business”.
This is the sixth time it has issued a profits warning in two years under chief executive Kauo Hirai, who is attempting to turn around the electronics division that comprises mobile, gaming and imaging.