Sony expects its annual loss to swell to more than $2 billion after writing down the value of its troubled mobile business as phone sales were battered by brutal competition.
The Japanese electronics and entertainment conglomerate said Wednesday it anticipates a net loss of 230 billion yen ($2.15 billion) for the fiscal year that ends March 31, 2015. Its previous forecast was for a 50 billion yen ($466 million) net loss.
Sony has been trying to reshape its business after years of red ink. It said the bigger loss stems from a lower valuation of its mobile phone business due to weaker than expected sales. The company is recording an "impairment charge" of 180 billion yen ($1.7 billion) in the July-September quarter.
The impairment charge is purely an adjustment to the company's balance sheet, involving no cash, but it reflects that the mobile business is far less valuable and will generate lower profits than previously thought.
Sony said it revised its mobile communications business strategy to reduce risks and stabilize profits in light of "significant change in the market and competitive environment of the mobile business."
It plans to concentrate on its "premium lineup" of smartphones and reduce the number of mid-range models.
Sony plans three Xperia Z3 smartphone and tablet models, with its signature waterproof capabilities, for this fall. For the first time, one of the phones will be available in the US, through T-Mobile, at about the same time as the rest of the world, rather than months later.
It also plans a new SmartBand fitness device that will include a small display to show the status of various activities. Its SmartWatch 3 will have GPS capabilities built in, allowing for more accurate tracking of outdoor fitness activities.
The smartphone business has proven tough for Sony. Apple and Samsung dominate at the top end of the market while Chinese and other Asian manufacturers are hogging the market for cheaper phones that are most likely to appeal in fast-growing developing countries.
The profit warning followed a surprise eightfold jump in Sony's April-June quarterly profit thanks to gains from selling buildings and its stake in a video-game maker.
Sony on Wednesday left its full-year sales forecast unchanged at 7.8 trillion yen ($72.8 billion). It said it won't pay a dividend to shareholders for the first half or full year.
The company reported a 128.4 billion yen loss in the fiscal year that ended March 31.