The double whammy of a hacker attack on its online gaming service and production disruptions from Japan's tsunami have resulted in a $3.2 billion loss for Sony Corporation for the fiscal year which ended on March 2011.
Sony, the Japanese manufacturer of the Playstation 3 console and flat panel TV's announced the loss ahead of its official earnings announcement under Tokyo Stock Exchange rules. It had earlier predicted a profit of about $860 billion.
The electronics manufacturer was one of the many Japanese manufacturers affected by the March 11 earthquake and tsunami. Production shortages have resulted in a scarcity of parts. Sony's chief financial officer, Masaru Kato, said these shortages have eased but full recovery is yet to be had.
“Our supply chain was significantly damaged by the earthquake and tsunami. In addition to direct damages, component-procurement conditions and power outages are also affecting our operation,” Kato stated.
Sony anticipates spending $134 million to fix buildings, machinery, equipment and inventories but also expects insurance to cover many of these costs.
The hacker attack on its online gaming service not only affected millions of its subscribers, but also cost the company dearly. Sony spent about $170 million to cover costs for improvements to its network security, free access to content, identity theft insurance for its customers and an investigation into the incident.
“These amounts are our reasonable assumption based on the information currently available to Sony. So far, we have not received any confirmed reports of customer identity theft issues, nor confirmed any misuse of credit from the cyber-attack,” Kato said.
“Those are key variables, and if that changes, the costs could change,” he added.
For the fiscal year 2012, the electronics giant expects the earthquake to cost the company a total of $1.83 billion in consolidated operating income.
“With respect to our forecast for consolidated results for the fiscal year ending March 2012, even after taking into account the impact of the earthquake, we are expecting our consolidated sales to grow year-on-year and operating income to be flat year-on-year,” Kato said.