Sony drops after taking $1 billion writedown in movie business
Sony Corp. dropped the most in almost three months after the company said it will take a 112 billion yen ($1 billion) writedown in its movie business, citing diminished future profitability.
The shares fell as much as 4 percent to 3,362 yen in early Tokyo trading on Tuesday, the biggest intraday decline since Nov. 9. To offset part of the loss, the company also said it would sell shares in the medical web service M3 Inc. to Goldman Sachs Group Inc.’s Japan unit, in a deal worth 52 billion yen. M3 shares slipped as much as 6.4 percent.
The writedown, the most recent in a series of blows to Sony’s balance sheet that has included charges related to image sensors, batteries and earthquake damage, contrasts with improving consumer electronics operations and growth in the games segment. In June, Sony warned the movie division was at a risk of posting more losses. The studio has struggled recently, including with last year’s Ghostbusters sequel and a movie based on the Angry Birds video game. The writedown announcement comes two weeks after Sony said the chief executive officer of Sony Entertainment, Michael Lynton, is stepping down after a 13-year run.
“There are many investors who have not forgotten how Sony in past repeatedly over-promised and under-delivered,” Atul Goyal, an analyst at Jefferies Group, wrote in a report. He reiterated his buy rating on the stock. “We think this is the new management owning up the mistakes of Sony’s past.”
After Chief Financial Officer Kenichiro Yoshida took over in 2014, he said Sony had revised earnings forecast more than a dozen times in seven years. Since then, he has led a restructuring to focus on games, financial services and content that has included the company exiting personal computers and separating its TV manufacturing unit into a new division. The company said it would book the latest charge in the fiscal third quarter and is examining how that will affect its forecasts.
No comments yet