Sony Increases Loss Forecasts on Tax Changes

Sony

, maker of the PlayStation, forecasted an additional 300 billion yen loss in fourth-quarter tax expenses due to tax code changes mostly in the U.S. Sony now expects to lose 520 billion yen ($6.4 billion) for the year ended March 2012. In February the company estimated it would lose 220 billion yen and last year it reported a net loss of 259.6 billion yen. The tax costs will come from a change in US tax code about how to value deferred tax assets and anticipated movements of cash between some of the company's international components. The additional expenses are not a result of any anticipated changes in the company's financials. Chief Executive Officer Kazuo Hirai replaced Howard Stringer earlier this month after increasing profits for the company's PlayStation unit in hopes that he would be able to return the company to profitability. This year will be the fourth year of losses for the company, and the most-recent loss is anticipated to be the worst since the company was founded. Hirai said he plans to close down less competitive businesses to increase income for Sony, which announced a 180 billion yen anticipated operating profit for the fiscal year ending March 2013. The cuts will likely come from the firms TV business, which has reported eight years of losses. It was also the main reason Sony increased its predicted losses for the year from November's 90 billion yen to 220 billion yen in February. “Restoring the TV and mobile business to the black presupposes that the company will adopt a growth strategy,” said a Bank of America

analysts note. “Over the medium term we hope to see growth driven by 1) the imaging business, including semiconductors, 2) entertainment, and 3) life sciences etc., including financial services.” Part of the company's growth strategy may be getting lean. Sony announced a job cut of 10,000 jobs, about 6% of the global workforce, earlier this week. Analysts estimate that 2,000 of the jobs come from the sale of its small and mid-sized LCD operations and 3,000 of the jobs come from the sale of Sony Chemical and Information Device. The remaining 5,000 may be concentrated in the TV business, possible good news for investors. The company will make an official announcement at is April 12 briefing. “Restructuring of the TV business is likely to be seen as positive in the announcement,” said Bank of America in a different analyst note. “We would need to see a credible picture of how Sony is to now evolve before we can change our investment opinion.” Sony is not the only Japanese tech manufacturer to struggle with its television business this year. Panasonic

named a new president in February, who also has the goal of reviving the company's television industry, following a forecasted net loss of $9.7 billion for the year ended in March. Sharp (SHCAY.PK) also record its worst annual loss ever, 520 billion yen, as the company cut TV panel production at two of its plants.