Sony slashes 2008 earnings forecast by a cool billion

Sony Corporation (NYSE: SNE) told the world yesterday that it would see a profit drop for its fiscal 2008 period of roughly 59% from the previous fiscal year, revising its summer forecast of just a 38% drop. But here's the kicker: it also revised another summer 2008 figure, stating that earnings in fiscal 2008 would be in the arena of $1.5 billion from the summer forecast of $2.45 billion. That's almost an entire billion in revisions since just this summer.

That, my friends, is indicative of a severely pinched consumer electronics marketplace, and it doesn't bode well for this holiday's retail shopping season whatsoever. Sony pointed its finger at flat-panel televisions (no surprise) and categories like digital cameras and video cameras as having a large impact on 2008 earnings. Not only is the competition taking sales away based on lower prices (think Vizio and other brands), but consumers are conserving that precious cash as well. Sony's premium branding and pricing placement just isn't going to continue resonating in this kind of economic environment.

If the Consumer Electronics Association really thinks that consumer electronics sales the rest of this year (and into 2009) won't be hurt by slimmer customer pocketbooks, they are sadly mistaken. You can't cover it up -- all industries are going to feel the wrath. In fact, they already are as proved by Sony's announcement here. Even South Korean consumer electronics giant LG Electronics saw a 93% profit drop in its latest quarter. Time to batten down the hatches, Sony. The hurt is just beginning.