TOKYO, Japan - American apple pies, English breakfast tea ... these items instantly recall images of their countries of origin.
For Japan, it's electronics. More specifically, Sony Corp. has defined Japanese electronics ingenuity to the global marketplace for decades. So it only makes sense that the Nikkei plunged 9.6 percent on a profit warning from Sony: That it would see a 59 percent earnings drop, year to year, this quarter.
Sony cited poor sales and a strong yen. A double whammy, if you will. Not only is there falling demand from consumers, but the strength of the yen has made business for exporters even more expensive. And the yen was strong versus the U.S. dollar, which plunged in trading into the 94 yen territory.
Inside a major Japanese company today (I'll refrain from naming the company as its earnings report is not out yet,) workers told me something's got to be done. They hoped Japan's government would take a more active role in loosening credit with its allies' financial markets.
But the sense they have is: "We'll believe it when we see it." Until then, they're expecting the bad news to keep coming for Japan's biggest corporations.
A marquee company showing such steep profit losses only confirms to the market what investors had been fearing - that we are in the midst of a true global slowdown affecting the bottom line of major companies.
Next week, Honda will release its earnings report. Analysts widely expect the news will not be good, as automakers see a worldwide softening in demand. Japan is bracing for yet another possible beating for another company, but also to its overall business psyche.
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