Earthquake and hacking scandal hit Sony profits

Electronics giant Sony forecast a lower-than-expected move back into the black this year after Japan's earthquake and tsunami and a computer hacking scandal caused its worst losses for 16 years in 2010.

Sony, which makes PlayStation video games, Vaio computers and Bravia TVs, predicted a $975 million (596.2m) net profit for the year that started on April 1, compared with market forecasts of 105 billion (791m).

Supply chains thrown into chaos and damage caused by the earthquake and tsunami forced Sony to take a charge on tax credits resulting in a $3.2bn (1.96bn) net loss in 2010-11, its biggest deficit since 1995 and the second worst on record.

It plans to re-start production of Blu-ray discs and magnetic tape at a tsunami-flooded plant in the next two months, but said the disaster would continue to affect almost all areas of the business, slashing operating profit by 150bn (1.13bn) during the year.

In particular, it said its television business, which was its biggest single business and represented 17 per cent of total sales in 2010-11, was likely to stay in the red for an eighth straight year, with supply woes expected to hamper production later in the year. It forecast liquid crystal TV sales of 27 million units compared with 22.4 million sets in the past year.

Finance chief Masaru Kato said most of the 150bn impact would be in electronics, but almost all products would take a hit.

"Those likely to be worst hit are televisions, digital cameras and devices," Kato said.

The electronics and entertainment conglomerate is also reeling from one of the biggest ever Internet security breaches, which forced it to close its PlayStation video games network for nearly a month after data on tens of millions of users was leaked.

On Tuesday Sony said additional websites in four countries had also been hacked. Among the break-ins, personal information for 8,500 people was leaked from its Greek Sony Music Entertainment website.

Sony expects the hacking to drag down operating profit by 14bn in the current financial year, including costs for boosting security measures. It said it was sticking to a plan to restore its PlayStation Network in full by the end of May and that any delay would not be more than a few days.

Worries about the hacking have weighed on Sony shares, which have fallen by almost a quarter this year, three times the fall in the Nikkei average. On Thursday they rose marginally to 2,239.

Koji Takeuchi, senior economist at Mizuho Research Institute, said: "Looking at their forecast, it appears Sony is expecting a recovery in the latter half of the year, which is a bullish forecast, but there's a lot of uncertainty and there is a risk they come in below that expectation. It is still unclear what the financial burden of the security breach will be."For the year ending March 31, the company predicted that it will sell 15 million of its flagship PlayStation 3 game compared with 14.3 million in the year just ended. Sony reiterated its plan to release a next generation portable games device by the end of 2011.