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Sony heads towards loss

by on17 September 2014

Nobody wants our Xperias

Electronics giant Sony expects to post a wider net loss this year. The company wrote down the value of its mobile communications unit after smartphone sales failed to meet expectations.

Tokyo-based Sony said in a statement that it expects a $2.14bn net loss for the year ending March 2015. A loss was always on the cards by not that much. In July, Sony cut its projected smartphone sales for the current fiscal year by 14 per cent and announced it was expected a significant loss for its mobile business for the second-quarter.

The writedown in the value of its phone business comes against a backdrop of tough competition from places like China. It can take some comfort from the fact it is not alone in its suffering. Korean rival Samsung has announced a 12 per cent year-on-year drop in smartphone sales in the second-quarter of 2014.

Sony claimed that Apple had taken over the Japanese market and this had contributed to its poor performance. Samsung blamed inventory mismanagement and a strong South Korean won for its smartphone woes. But the real reason is that Sony and Samsung are facing an impossible tide of cheap but good phones coming out of China.

At the moment, three of the top six smartphone manufacturers in the world are Chinese. Lenovo, Huawei and ZTE occupy the third, fourth and sixth positions on the smartphone top table while companies like Xiaomi are lying in wait. In 2013, Sony's mobile-phone unit logged an operating loss amid wilting sales, forcing the firm to cut its annual sales target to 43 million handsets.

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