Sony's supply chain hit hard by Japan disaster

By Freddie Pierce
Japans automotive industry may be on the road to supply chain recovery, but the electronics industry still has a ways to go. Sony reported a 15.5 billi...

Japan’s automotive industry may be on the road to supply chain recovery, but the electronics industry still has a ways to go.

Sony reported a 15.5 billion yen (U.S. $199 million) loss in its first quarter, with the March earthquake and tsunami causing supply chain disruptions and PlayStation hacking leading to a decrease in consumer confidence. Softer television sales and a strong yen also helped lead to Sony’s loss.

 The first quarter of 2010 saw profits of 25.7 billion yen, which is a huge year-on-year dip for the electronics manufacturer. Sony lowered its profit forecast for the fiscal year by 25 percent in lieu of the supply chain troubles.

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The Japan disaster constrained Sony’s supply chain and lowered production of electronic components across the board, but the company is still projecting to recover faster than it initially forecasted.

"The impact from the quake was substantial in the first quarter, but the supply chain has bounced back rapidly, so from the second quarter onward we expect things to brighten considerably," Sony Chief Financial Officer Masaru Kato said in a statement.

Adding to Sony’s tough situation was Nintendo’s announcement that it will drop the price of its 3DS game system from $249.99 to $169.99 to better compete with Sony’s line of gaming devices and mobile devices.

 The electronics supply chain will hopefully be in a better position to handle the next disaster, as companies around the globe have taken a harder look at better risk-management practices.

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