Sony and Toshiba post significant losses

Japanese electronics companies are having a tough time

As Japan, like much of the rest of the world, sinks ever deeper into recession, two of its electronics giants, Sony and Toshiba, have posted significant losses for the past quarter, blamed on dwindling corporate and consumer demand.

Sony posted an operating loss of almost ¥18bn (£140m), down from a ¥236bn (£1.84bn) profit this time last year. Nearly ¥16bn (£124m) of the loss came from Sony's electronics division.

The company issued a profit warning last week saying that it expected to post full-year operating losses of ¥260bn (£2.02bn) and that it would be doubling up on its cost-saving measures.

Toshiba is also finding the economic downturn hard to deal with, announcing an operating loss of ¥158.8bn (£1.23bn) for the quarter, well below analyst predictions, and down from a profit of ¥42.1bn (£326m) a year earlier.

Toshiba also issued a profit warning for the full fiscal year ending in March, saying that it now expected to post an operating loss of ¥280bn (£2.18bn), rather than the ¥150bn (£1.17bn) profit it had previously estimated.

Both companies appear to have fallen victim to reduced consumer demand and a strong yen, making Japanese goods more expensive in the international market. They also face increasingly stiff competition from South Korean rivals Samsung and LG Electronics.

More profit warnings and job cuts seem inevitable for Japanese tech companies. Sony chief executive Howard Stringer noted at a recent press conference that the firm had been "putting off unpleasant decisions" and now had to "move in a hurry".