Sony has posted a record $6.4 billion net loss for financial year and plans to axe 10,000 jobs as it aims to make an operating profit of 180 billion yen this year.
The Japanese manufacturer will cut 10,000 jobs - around 6 per cent of its global workforce - according to media reports this week. The firm has been hammered by weak demand for its televisions and been overtaken by more innovative gadget rivals such as Apple and Samsung.
Kazuo Hirai, who took over as CEO this month, has said he is prepared to take "painful steps" to revive the company and would not hesitate to scale back or withdraw from businesses if they were not competitive.
The Sony veteran, known for reviving the PlayStation gaming operations through aggressive cost-cutting, has promised to get the struggling TV business - which has lost $10 billion alone in 10 years - back on its feet within two years.
Sony forecast a 520 billion yen ($6.4 billion) net loss for the year to end-March 2012. In February it had forecast an annual net loss of 220 billion yen. The additional loss is from write-offs of tax credits in the United States, which the company cannot use because of the losses it has racked up.
Analysts had forecast a full-year loss of 214 billion yen, according to Thomson Reuters I/B/E/S.
"To bring Sony back, Hirai needs to develop personnel and platforms that create competitive and innovative products, but that will be a formative task after a lot of talent left under early retirement plans," said Tetsuru Ii, president of Commons Asset Management, who oversees about 2.7 billion yen worth of assets and does not hold a stake in Sony.
"The old Sony culture would only allow it to make things that were the best globally. Under that logic, does it make sense for Sony to continue its TV business, when it's not even the market leader in Japan?
"In terms of management philosophy, (Hirai) will have to choose and focus the company's business activities."
Some analysts believe Hirai, a fluent English speaker, can rekindle the Sony flame, saying he has a good grasp of the business and is likely to know how to break down its silos and integrate its divisions.
A key concept in Hirai's strategy hinges on merging Sony's robust roster of entertainment properties - including singers Kelly Clarkson and Michael Jackson, and the "Spider-Man" and "Men in Black" film franchises - with its Vaio, Bravia and other electronics brands, in an effort to boost sales.
He has said the TV business would be crucial to this "convergence" strategy, brushing aside suggestions it may need to pull out of the market.
Recently, Sony exited an LCD panel venture with Samsung, enabling it to obtain screens for its TVs more cheaply. It also agreed to buy out Ericsson's half of their smartphone venture for $1.5 billion to shore up its position in a market where Apple and Samsung have become leaders.
Hirai, who was promoted from head of Sony's consumer products and services businesses that produce the bulk of Sony's $85 billion in annual sales, has also singled out medical as a potential core business for the future.
Sony shares closed down 3.5 per cent ahead of the announcement on Tuesday, its biggest one-day drop in three weeks. The benchmark Nikkei average ended around 0.1 per cent lower. The stock has almost halved since little more than a year ago, and has dropped 11 per cent in the past 10 trading sessions.
