Sony’s Blu-ray bet returns a ‘bag of hurt’
Sony is warning shareholders to expect poor financial results for its fiscal year ending March 31, 2014. The electronics giant previously expected to pull in an operating income of 80 billion yen ($782 million) over the financial year, but is today adjusting that figure down to just 26 billion yen ($254 million).
The sharp reduction — the new operating income estimates are 68 percent down from a February forecast — can be attributed to a pair of somewhat unexpected events. Roughly 30 billion yen ($293 million) of the drop is due to “additional expenses” from Sony’s exit from the PC business. The company announced it’s to sell its PC division to a Japanese investment fund earlier this year.
The second charge to due to what Sony calls “demand for physical media contracting faster than anticipated,” especially in Europe. Because of this, Sony says it does not believe the business will generate “sufficient cash flow in the future to recover the carrying amount of long-lived assets.” It anticipates an impairment charge on those assets, and a second charge on the overall value of its disc manufacturing business, which will amount to 25 billion yen ($245 million).
Blu-ray was officially introduced in 2006, backed by Sony and other manufacturers, and briefly battled against competing “next-generation” format HD-DVD. Buoyed by widespread adoption thanks to integration with the PlayStation 3, the popularity of Sony’s format of choice saw HD-DVDs die without trace.
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