Sony flags nearly $1 billion movie business write-down

Sony will take a write-down of nearly $1 billion in the fiscal third quarter, the company said Monday, blaming expected weaker profits in its movie business following a decline in the DVD market.

The Tokyo-based electronics and entertainment giant said the charge amounted to 112.1 billion yen ($980 million) and it comes weeks after the departure of Sony’s entertainment division boss Michael Lynton.

“The downward revision was primarily due to a lowering of previous expectations regarding the home entertainment business, mainly driven by an acceleration of market decline,” Sony said in a statement.

“The decline in the DVD and Blue-ray market was faster than we anticipated,” Takashi Iida, a Sony spokesman, told Bloomberg News.

Sony also cited an expected reduction in film profitability.

The company said it was evaluating the impact on its financial results and would deliver new annual forecasts on Thursday when it announced earnings for the three months through December.

“There has been a suspicion in the market that Sony doesn’t have a firm grip on the movie business, but still the amount is a surprise,” Kazunori Ito, an analyst at Morningstar Investment Services, told Bloomberg.

“That said, with Lynton’s departure and this write-down, all the bad news is out and the attention can turn on their plan for the coming fiscal year,” he added.

In a separate announcement, Sony reported the sale of a little more than five-percent stake in Japanese medical information site M3 to Goldman Sachs for about 37 billion yen.

The company that gave the world the Walkman has been working to stay profitable under a painful restructuring that has included layoffs and asset sales after years of huge losses.