Sony says it expects to post losses when it hosts its earnings conference call on Thursday, reversing previous predictions of a return to profitability.
Sony said on Monday that it expected the Tohoku Earthquake, which occurred March 11, to have an impact. But the company said a bigger issue would be a non-cash charge of ¥360 billion ($4.4 billion) against certain deferred tax assets in Japan. The total loss would be ¥260 billion ($3.2 billion).
Sony had originally forecast that it would be profitable for the 2011 fiscal year, with earnings recovering after the worldwide recession. But the earthquake, by causing the company to shutter 10 plants and disrupting supply chains, ended hopes that it could end the year on a strong note. The total cost was about ¥26 billion ($317 million). Some ¥22 billion ($267 million) was pulled from sales and ¥17 billion ($206 million) will be knocked off operating profit.
The stock has not been hurt by the announcement -- if anything it rose, closing on Monday at ¥2,211 and rising to ¥2,270 by the end of Tuesday's trading in Japan. In the U.S., Sony's American depositary receipts opened at $27.66, up from Monday's close of $27.05.
A bigger question is what happens in fiscal 2012. Sony says the earthquake in Japan and the data breach in April will cost it about ¥164 billion ($2.0 billion) by the end of that fiscal year. In addition, there was a massive data breach on the PlayStation Network, which exposed the information of 77 million users.
The earthquake, the company says, will cause profits to be down by ¥150 billion ($1.8 billion) by the end of March 2012. The impact of the data breach is about ¥14 billion ($171 million) and will show up in the next fiscal year's results, as it happened after March 31. Much of that is implementing better security systems and $1 million in insurance against losses if a customer's information is misused, though there have not been any reports of such misuse.
When the PlayStation Network was hacked in April, Sony had to take down the network for nearly a month to deal with the problem. The welcome back program includes free in-game downloads, 30 days of free access to PlayStation Plus, 30 days of free access to Qriocity's Music Unlimited, as well as free identity theft monitoring from Debix. All of this adds to the financial impact of the hacking.