Sony expects huge loss after bailing on PC business

Here's a euphemism to start your morning: Sony just issued a news alert, giving investors a heads-up that it's "revising" its earnings forecast for the 2014 fiscal year, which actually ended back on March 31st. Revising! Here's what that really means: Sony previously said it would generate 80 billion yen in operating income for the year. The company is now dialing that estimate down to 26 billion yen -- a decrease of 67.5 percent. All told, the company expects to book a net loss of 130 billion yen (final numbers to be announced later this month). Previously, it said it would lose 110 billion. Ouch, Sony.

So what happened? How could Sony's prediction have been so far off? What happened was a major restructuring in which Sony sold off its PC business. So, not only did Sony have to pay 30 billion yen in fees as it wound down its VAIO division; it also has loads of unsold computers that no one wants (can you blame people?). Here's how the company put it:

Since Sony's announcement on February 6, 2014 that it will exit the PC business, PC sales for the fiscal year ended March 31, 2014 and expected PC sales for the fiscal year ending March 31, 2015 are underperforming the February expectation. Consequently, Sony expects to record write-downs for excess components in inventory and accrual of expenses to compensate suppliers for unused components ordered for Sony's spring PC lineup.

Adding injury to injury, the company also expects to book a roughly 25-billion-yen charge related to its disc business, which apparently isn't doing as well as expected, especially in Europe. No surprise there: Who buys Blu-ray discs anymore? (Not Europeans, apparently.)