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Sony posts annual loss despite strong PS4 sales

Full year hardware sales decline, while software sales rise

As expected, Sony has posted a significant loss for the financial year ended March 31 2014.

On Wednesday the company announced a net loss of 128.4 billion yen (£746m/$1.25b), compared to net income of 41.5 billion yen (£241m/$406m) in the previous fiscal year. It represents the firm's fourth annual loss in five years.

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Annual sales rose 14.3 per cent to 7,767.3 billion yen ($75,410m). Sony said the increase was "primarily due to the favourable impact of foreign exchange rates, the launch of the PlayStation 4, as well as a significant increase in sales of smartphones".

The company's games division posted a year-on-year sales increase of 38.5 per cent to 979.2 billion yen (£5.7b/$9.6b). However, it recorded an operating loss of 8.1 billion yen (£47m/$79m), compared to operating income of 1.7 billion yen (£9.9m/$16.6m) in the previous fiscal year.

Sony said the deterioration was primarily attributable to an increase in costs related to the PS4 launch as well as the recording of a 6.2 billion yen (£36m/$61m) write-off of certain PC software titles sold by Sony Online Entertainment.

The company sold 3.7 million PS4, PS3 and PS2 units combined in the fourth quarter of the year, compared to 3.4 million home consoles in the same quarter a year earlier. It sold 14.6 million home console units for the full financial year, down from 16.5 million in the previous year.

Sony also sold 700,000 Vita, Vita TV and PSP units combined in the fourth quarter, versus 1.3 million in the same period a year earlier. Full year portable console sales declined from seven million units to 4.1 million.

Fourth quarter software sales increased from 79 million units a year earlier to 91 million, while annual software sales rose from 266 million units to 374 million.

Sony said last month that PS4 sales topped seven million units as of April 6.

Group CEO Kaz Hirai, who is set to reveal Sony's long-term strategy on May 22, hopes to return the company to growth by rebuilding its electronics arm around games, imaging technology and mobile devices.

Following the company's disappointing results, Hirai and other executives will take a pay cut by forgoing their annual bonuses.

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