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Strong yen hurts Japanese firms | |
(about 1 hour later) | |
Sony, set to make its first annual loss in 14 years, has reported a quarterly loss as weak sales of goods and a stronger yen have taken their toll. | Sony, set to make its first annual loss in 14 years, has reported a quarterly loss as weak sales of goods and a stronger yen have taken their toll. |
The firm reported an operating loss of 18bn yen ($200m; £141m) for the October to December third quarter, down from 236.22bn yen profit a year before. | The firm reported an operating loss of 18bn yen ($200m; £141m) for the October to December third quarter, down from 236.22bn yen profit a year before. |
It comes as Toshiba expects to make an annual loss as demand wanes for flat screen televisions and semiconductors. | |
Meanwhile Nintendo's profits are up but it has cut its yearly profit forecast. | |
Unconventional games | |
The video games maker reported a 27% increase in April to December operating profit, to 501bn yen, thanks to strong demand for its Wii games console and DS handheld. | |
The two devices have no real rivals and, as unconventional games billed as improving fitness or mental, agility have had wide appeal. | |
However, like Sony, it said the stronger yen was taking its toll, and lowered its annual operating profit forecast to 530 billion yen from 630bn yen. | |
A stronger yen makes Japanese products less competitive and cuts into the value of overseas earnings. | |
Job cuts | Job cuts |
Japanese firms have dominated the electronics business for decades, but are now suffering, as the broader global recession has hit consumer demand for its export products. | |
They have also been hit by a strong yen which currently makes it harder to compete against rivals from countries such as South Korea. | They have also been hit by a strong yen which currently makes it harder to compete against rivals from countries such as South Korea. |
Last week Sony has said it was going make its first annual loss in 14 years as the global economic slowdown hits demand for its products. | Last week Sony has said it was going make its first annual loss in 14 years as the global economic slowdown hits demand for its products. |
On Thursday it reiterated its latest forecast of a record 260bn yen operating loss for the year to 31 March. | On Thursday it reiterated its latest forecast of a record 260bn yen operating loss for the year to 31 March. |
Sony is taking restructuring steps including cutting 16,000 jobs and closing five or six plants. | Sony is taking restructuring steps including cutting 16,000 jobs and closing five or six plants. |
'Price erosion' | 'Price erosion' |
Also on Thursday, Toshiba has now also said it expects to make a loss for the year to March as demand wanes for semiconductors and flat-screen televisions. | |
The electronics and engineering giant expects a net loss of 280bn for the 12 months, against 127.4bn yen net profit the previous year. | The electronics and engineering giant expects a net loss of 280bn for the 12 months, against 127.4bn yen net profit the previous year. |
In a statement, Toshiba said the worldwide economic slowdown "caused rapid price erosion and demand declines in semiconductors and liquid-crystal display" televisions. | In a statement, Toshiba said the worldwide economic slowdown "caused rapid price erosion and demand declines in semiconductors and liquid-crystal display" televisions. |
Overall Japanese exports were down 35% in December, compared to a year earlier, with factories cutting production and laying off workers. | |
'Totally insufficient' | |
Japan's Prime Minister Taro Aso has told parliament he will take bold steps to make his the first country to emerge from the global crisis. | Japan's Prime Minister Taro Aso has told parliament he will take bold steps to make his the first country to emerge from the global crisis. |
Mr Aso is struggling against poor approval ratings - regularly hitting new lows in the popularity stakes - ahead of a general election due later this year. | Mr Aso is struggling against poor approval ratings - regularly hitting new lows in the popularity stakes - ahead of a general election due later this year. |
Some market figures have called for more aggressive Japanese government action to halt the yen's rise. | |
"We're currently in a deep recession, yet the Japanese government's policies are totally insufficient," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments. |