Sony Expects Weak Operating Profits For Fiscal Year 2016

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Last month Sony published its earnings for fiscal year 2015, revealing that revenues generated by its mobile division have dropped by yet another 20%. At the same time, the Japanese company postponed its forecast for fiscal year 2016 because it had to evaluate the damages caused by the recent earthquakes in Kumamoto, where one of Sony's main image sensor factories operates. Today, after evaluating the situation, Sony Corp revealed its predictions for fiscal year 2016 (April 2016 through March 2017), and sadly it looks like the company doesn't expect to register a lot of operating profit throughout the fiscal year ending March 2017.

The recent earthquakes in the southern city of Kumamoto, Japan, left their mark on Sony's business, and the company expects these unfortunate events to contribute to lower-than-expected operating profits for fiscal year 2016. One of Sony's five image sensor plants is located in Kumamoto, and although Sony's initial expectations (under normal circumstances) were to generate profits of roughly 400 billion yen (~US$364 million), following the earthquakes the company doesn't expect more than a 2% increase (~300 billion yen) in operating profits by March 2017. Sony also revealed that the earthquake's impact on its overall business will cause damages of 115 billion yen. Out of the said 115 billion, Sony is said to register 105 billion yen in damages from its image sensor and digital camera business alone, despite the fact that its image sensor plant in Kumamoto resumed its activities earlier this month. The company also revealed that wafer production will resume before the end of August, but despite these efforts, Sony predicts that its device division will record operating losses of 40 billion yen.

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Sony is one of the world's largest CMOS image sensor manufacturers. Over the years, its sensors have been used by countless smartphone manufacturers for a myriad of models, and the list of clients includes both Samsung and Apple. In fact, Sony was recently believed to manufacture the alleged dual-lens camera modules for the upcoming iPhone 7, but it is possible that Apple may now be forced to look elsewhere for a different supplier. Sony revealed that it expects to lose an additional 30 billion yen for cancelling the development and production of certain high-end, unspecified cameras, and the company failed to mention whether or not these sensors were intended for Apple or perhaps other Android smartphone makers. Either way, despite the rough patch Sony has to go through, some market analysts are still confident that the company's shares will increase in value throughout fiscal year 2016, partly because Sony's PlayStation/gaming business could boom once again at E3 next month.