Sony issues huge profit warning as smartphone arm struggles

The warning is the sixth in Kazuo Hirai 's troubled two-year tenure

Alex Lawson
Published: 17 September 2014

Technology giant Sony has issued a profit warning after its smartphone arm was hit by a huge impairment charge as the company turned down the volume on its value.

Sony warned it will make a much larger than expected loss after it revealed a 180 billion yen (£1 billion) charge following “a significant change in the market and competitive environment”.

The Japanese firm is now predicting a 230 billion yen loss for the year ending March 31, versus its previous forecast for a 50 billion yen loss. It expects an operating loss of 40 billion yen instead of a 140 billion yen profit flagged in July.

The warning is the sixth in the troubled two-year tenure of chief executive Kazuo Hirai as he attempts to turnaround its electronics division which consists of mobile, gaming and imaging divisions.

Sony is attempting to improve its mobile arm by reducing the number of models it produces and focussing on premium phones as the market has increasingly turned to rivals including Apple and Samsung.

A slowdown in the US and China have also led to poor sales of its Xperia phone as Sony has struggled to build relationships with the dominant networks.

Sony finance chief Kenichiro Yoshida joined in April and had promised a more realistic approach to financial guidance, however today’s warning will come as a hammer blow to his reputation.