Sony has said the failure of its smartphone division will cost the company ¥180bn (£1.03bn) as tough market conditions hamper sales.
In a notice to investors Sony said it had been forced to revise its forecast for its Mobile Communications (MC) division, which would result in the impairment charge of £1.03bn.
This charge of ¥180bn means the company’s expected net loss for the financial year is ¥230bn, up from the ¥50bn forecast in July.
As a result of this huge hit to the company’s finances Sony also confirmed it would not be paying a dividend to shareholders for the fiscal year.
“In light of the downward revision in this fiscal year’s forecast for consolidated financial results due to the impairment charge in the MC segment announced today, Sony has determined to pay no interim dividend or year-end dividend,” it said.
The huge losses underlined the tough conditions in the smartphones market, dominated by Samsung and Apple, with Sony's Xperia range, despite being well received by users and reviewers alike, has clearly not sold anywhere near enough to boost Sony's fortunes.
Gartner data from February 2014 gave Sony just a 2.1 percent share of the global smartphone market. This is behind rivals such as HTC, Lenovo and Huawei.
Sony has been on the back foot in several markets it previously used to dominate. It announced plans to ditch its Vaio PC business and TV division earlier this year as part of its efforts to try and refocus its efforts on more profitable areas of its business.
Neil Mawston, an analyst at Strategy Analytics, told V3 that Sony is being slowly squeezed out of the market at both ends due to its failure to recognise how the market was developing.
“Sony is trapped in a pincer-movement between Apple and Samsung at the high end and the long tail of Chinese brands like Huawei at the low end,” he said.
“Across almost all the major global smartphone and tablet markets, like China, Sony has struggled to roll out enough models in enough retail channels, and their under-performance is finally catching up with them. Sony has been sitting on its hands and doing little or nothing in major new markets for years.”
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