Media & Entertainment

Sony Hack Has Cost Its Business $15M So Far

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A large-scale hack of Sony’s servers last year brought huge publicity to the company — as employee and industry insider emails leaked, a planned Sony Pictures film release was scrapped and then subsequently rushed out as an online release, and the finger of blame was pointed at North Korea. Reputational damage caused by the incident is all but impossible to quantify.

But the cyberattack has had a specific financial cost to Sony’s business, detailed today as a line-item on its preliminary results for its Q3, ending December 31, with the company noting its Sony Pictures division took an estimated $15 million (1.8 billion yen) hit in “investigation and remediation costs” over the quarter to deal with the cyberattack.

The hack not only resulted in what Sony terms “serious disruption of its network and IT infrastructure”, but also in Sony Pictures being unable to close its financial statements for Q3 in time to report actual results today (hence the division reporting preliminary results).

Sony said operating income for Sony Pictures is expected to have decreased 21.9 billion yen year-on-year to 2.4 billion yen ($20M) — primarily as a result of decreases in Motion Pictures and TV productions sales, but with income also taking a sizable hit from the hack. (The ‘clean-up’ costs of which is not that far off the total profit being expected by the division.)

Reporting consolidated results for its business as a whole, Sony said it expects sales in its first three quarters to increase 6.3% year-on-year, off the back of “significant” increases in its games & network services, mobile communications and devices segments.

However Sony also notes lower than expected mobile sales due to a decrease in unit sales of smartphones “mainly in the Asia Pacific region”. It also notes significant decreases elsewhere, primarily related to its exit from the PC business.

Overall, Sony’s operating profit for the quarter is being forecast at 178.3 billion yen ($1.52BN) — a doubling year on year.

Sony is continuing to undertake business restructuring efforts in a bid to boost performance, including for its smartphone unit which took a $1.59 billion write-down last quarter.

According to Reuters, Sony will be announcing a new strategy later this month, on February 18, and is planning to cut 2,100 jobs in its smartphone unit by the end of the next fiscal year, ending March 2016, as it continues to seek to reshape the unit’s fortunes.

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