Shares of Sony (SNE) are down $1.58, almost 8%, at $18.53 after the company this morning warned its fiscal year ended in March will come in lower than expected because of a ¥300 billion non-cash charge to reflect the adjustment of certain assets.
The expected net loss of ¥520 billion, or U.S. $6.4 billion, is worse than the ¥220 billion the company had forecast on February 2nd, and worse than the $2.7 billion loss the Street has been expecting.
Sony said its history of losses meant it had to lower its estimation of the amount realizable from its U.S. deferred tax assets:
Based on U.S. GAAP under which Sony reports its consolidated results, cumulative losses in recent fiscal years are considered significant negative evidence regarding the realizability of deferred tax assets. Sony evaluates its deferred tax assets on a tax jurisdiction basis to determine if a valuation allowance is required. In the U.S., Sony’s holding company and its subsidiaries file a consolidated federal tax return. This consolidated tax filing group is expected to have incurred cumulative losses in recent fiscal years including the fiscal year ended March 31, 2012. After comparing this significant negative evidence, to objectively verifiable positive factors, Sony expects to record a non-cash charge to establish a valuation allowance against certain deferred tax assets held by the consolidated tax filing group in the U.S. This expected charge represents approximately 80 percent of the aggregate additional tax expense.
Sony lost $3.2 billion last year and hasn’t recorded an annual profit since 2008.