By David Owen
September 17 – Sony Corporation, the Japanese consumer electronics group that is one of six FIFA top-tier sponsors, has announced that it will pay no dividend for its current financial year, for the first time since its shares were listed in 1958, the year of Brazil’s first World Cup victory.
The announcement coincided with the disclosure that the company expects to report a net loss of Y230 billion ($2.1 billion) for the year to end-March 2015, more than four times the previous forecast. The revision is the result entirely of a Y180 billion ($1.6 billion) impairment charge in its mobile communications division.
At a briefing with journalists and analysts, top executives described the operating environment as “extremely challenging”, with Chinese smartphone competitors having made significant strides. But, indicating an intention to reduce headcount in the unit by around 1,000, they said they were “sure we can create a new Sony that amazes and moves our customers on a consistently profitable basis”.
The impairment charge can be traced back to Sony’s decision in February 2012 to acquire the remaining 50% of the Sony Ericsson joint venture that used to be a major sponsor of women’s tennis.
As Sony chief financial officer Kenichiro Yoshida explained, this deal put a fair value of €1.4 billion on the business, when its book value was negative to the tune of €600 million. Approximately €1.3 billion of this €2 billion gap was deemed to be goodwill, and this, at today’s exchange rate, is the amount of the charge.
Sony played a key role in making this year’s World Cup in Brazil a milestone for ultra-high definition technology, collaborating with FIFA on a number of 4K initiatives. The company was also a visible presence in Japan’s 2022 World Cup bid, which included the notion of transmitting life-sized 3D images of World Cup matches in real time to audiences all over the world, with former Sony chairman and chief executive Sir Howard Stringer taking part in the bid’s final presentation in Zurich.
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