Sony Expects $2.14bn Annual Loss as Smartphones Disappoint

Electronics giant Sony expects to post a wider net loss this year, as it wrote down the value of its mobile communications unit after smartphone sales failed to meet expectations.

Tokyo-based Sony said in a statement that it expects a ¥230bn ($2.14bn, £1.3bn, €1.6bn) net loss for the year ending March 2015, as against its previous forecast for a ¥50bn loss.

The ¥180bn writedown in the value of its phone business comes against a backdrop of tough competition from places like China.

Sony's stock finished 1.83% lower in Tokyo.

In July, Sony cut its projected smartphone sales for the current fiscal year by 14%, reporting a £15.5m-plus operating loss for its mobile business for the second-quarter.

Meanwhile, Korean rival Samsung has announced a 12% year-on-year drop in smartphone sales in the second-quarter of 2014.

Sony cited the domination by Apple of the Japanese market as contributing to its poor performance, while Samsung blamed inventory mismanagement and a strong South Korean won for its smartphone woes.

China Rises

However, for both Sony and Samsung, the biggest challenge is the same as the one facing almost every smartphone manufacturer - the rising tide of cheap-but-premium smartphones coming from companies in China.

At the moment, three of the top six smartphone manufacturers in the world are Chinese. Lenovo, Huawei and ZTE occupy the third, fourth and sixth positions on the smartphone top table while companies like Xiaomi - dubbed the Apple of the East - are lying in wait.

OnePlus, a nine-month old Chinese company, has gained a lot of attention for producing a smartphone with high-end specs that costs just £230, a fraction of what the flagship phones from the likes of Samsung, Sony and Apple cost.

In 2013, Sony's mobile-phone unit logged an operating loss amid wilting sales, forcing the firm to cut its annual sales target to 43 million handsets.