A Sony outlet store lies in the shadow of the twin cooling towers of the Limerick (Pa.) Nuclear Power Plant. Signs on the merchandise inside show how badly the electronics giant has struggled to avert a financial meltdown. Flashy flat-panel sets take up half the 6,000-square-foot store; all tout hefty markdowns as Sony tries to clear inventory for new models. Two months ago, Sony optimistically predicted it would sell 27 million sets this year; on July 28 it slashed the figure to 22 million and issued a profit warning.
The television business, Sony’s biggest revenue generator, is forecast to lose a billion dollars this year—following seven straight years of red ink. Royal Philips Electronics and several other longtime rivals have called it quits, saying they can’t compete as prices tumble into commodity territory. But Sony Chief Executive Officer Howard Stringer considers the TV unit vital to helping sell products that work with the company’s sets, including Blu-ray players and its popular PlayStation game consoles.