PlayStation Network Breach To Cost Sony $171 Million

By Colin Tan on May 23, 2011, 7:45PM EDT
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Sony is expecting a total of $171 million in losses due to the PlayStation Network breach last month. However, the company notes that that is just one of the few contributing factors, if the least, for the fiscal year.

The estimated numbers for the PSN breach covers the cost for the complimentary identity theft scheme as well as the costs for the "Welcome Back" programme.

"These amounts are our reasonable assumption based on the information currently available to Sony," Sony CFO Masaru Kato said.

"So far, we have not received any confirmed reports of customer identity theft issues, nor confirmed any misuse of credit cards from the cyber-attack. Those are key variables, and if that changes, the costs could change. In addition, in connection with the data breach, class action lawsuits have been filed against Sony and certain of its subsidiaries and regulatory inquiries have begun; however, those are all at a preliminary stage, so we are not able to include the possible outcome of any of them in our results forecast for the fiscal year ending March 2012 at this moment."

In addition, the March 11 quake is expected to make a dent in Sony sales up to 22 billion yen, roughly $269 million. Together with tax provisions, the company expects a $3.18 billion loss for the 2011 fiscal year.

Sony is believed to report a consolidated revenue of $87.8 billion for the 2011 fiscal year, which ended March 31, 2011, which is down 0.3 percent from its estimates prior to the March quake.

Regardless, Sony claims to have set aside about 360 billion yen, roughly $4.4 billion, for a valuation allowance, which is said to bring Sony's net income down from an estimated 70 billion yen to a whopping loss of 260 billion yen, roughly $3.18 billion.

"Our supply chain was significantly damaged by the earthquake and tsunami," Kato said. "In addition to direct damages, component procurement conditions and power outages are also affecting our operation."

For the coming fiscal year, Sony expects the earthquake to cost roughly $1.83 billion in consolidated operating income.

"With respect to our forecast for consolidated results for the fiscal year ending March 2012, even after taking into account the impact of the Earthquake, we are expecting our consolidated sales to grow year-on-year and operating income to be flat year-on-year," Kato said. "Additionally, we expect net income or loss attributable to Sony Corporation's stockholders is expected to be positive for the whole fiscal year ending March 2012."

Source: PCMag

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