Sony Expects Net Loss Of $2.15B In Current Fiscal Year, A Four-Fold Increase Over Previous Estimate

Update as of 4:33 a.m. EDT: CEO Kazuo Hirai announced Wednesday that the company will reduce the number of employees at its mobile communications unit by 15 percent, according to Reuters. The company had earlier aimed to expand its mobiles divisions.

Sony Corp (TYO:6758) announced on Wednesday that it would incur a significantly bigger loss in the current fiscal year than previously predicted. The Japanese electronics giant also announced that it would reduce the number of products offered by its mobile communications division and focus on premium products.

The company said that it now forecasts a loss of 230 billion yen ($2.15 billion) for the fiscal year ending March 2015, over four times higher than its previous loss estimate of 50 billion yen. The company also reduced the valuation of its mobile communications, or MC, division because the company’s smartphones did not live up to sales predictions.

“Under the new MRP (Mid-Range Plan), the overarching strategy for the MC segment has been revised to reduce risk and volatility, and to deliver more stable profits. This revision includes changing the strategy of the MC segment in certain geographical areas, concentrating on its premium lineup, and reducing the number of models in its mid-range lineup,” a company statement said.

Following the company's last forecast, Tokyo-based Sony had expected its smartphone segment to revive the company’s electronics business. However, because the mobile communications division failed to significantly enhance sales, the company said, in the statement, that it will record an impairment charge of 180 billion yen in the second quarter of this fiscal, equivalent to the entire amount of goodwill in the business.

In July, Sony cut the annual sales target for its mobile phones to 43 million handsets, down from 50 million units, Reuters reported.