The scandalizing hack, provoked by the imminent release of the Kim Jong-un assassination comedy, barely affected Sony’s bottom line
The high-profile cyber-attack that hit Sony’s Hollywood studio last year will have little impact on its bottom line, the Japanese media and electronics group said on Wednesday.
Announcing third quarter results that showed a bounce back in the company’s troubled electronics division, Sony said the hack would cost just $15m in “investigation and remediation costs” and that it doesn’t expect to suffer any long-term consequences.
The attack, organised by a group called Guardians of Peace and which the White House blamed on North Korea, was aimed at getting Sony to cancel The Interview, a comedy depicting the assassination of Pyongyang leader Kim Jong-un.
In what was probably the largest corporate hack in history, Guardians of Peace compromised the personal records of 47,000 employees and released a slew of embarrassing emails from the studio’s top management. The hackers also disseminated then upcoming Sony titles Annie, Fury and Still Alice on the web.
But the studio soon after released the movie when Barack Obama criticised it for caving in to the demands of its attackers. The film garnered $40m in digital sales after the company made it available for download, according to Sony, and another $6.7m in cinemas worldwide, according to industry tracker boxofficemojo.com. The film cost Sony $44m to make, according to documents leaked by the hackers.
“We don’t expect leaks of unreleased films online or damage to our IT systems will cause a significant loss,” Kazuhiko Takeda, vice-president of Sony’s corporate planning department, told reporters. “We had insurance against cyber attacks and will be able to recover a significant portion of the costs.”
The announcement came as Sony announced a turnaround in its struggling electronics division and said a weak yen had helped improve results.
The Japanese giant was once the world’s coolest gadget maker but has been outstripped by Apple and others over the past decade. Last year it cut its dividend to shareholders for the first time since the company went public in 1958.
Strong sales of products including its PlayStation 4 video-game consoles, which notched up 6.4m sales in the last quarter, a pickup in mobile sales and cost-cutting helped the company trim losses. Sony is now forecasting a loss of 170bn yen ($1.4bn) for the fiscal year, down from the 230bn yen ($1.95bn) loss it predicted, but it may still adjust the figures if the hack proves more costly than expected.
Sony is in the midst of a huge restructuring that includes job cuts and selling its laptop division and its Manhattan headquarters. The company announced another 1,100 layoffs in its mobiles division following another cut of 1,000 last year. Despite good reviews, Sony’s Xperia mobile phone range has failed to win over customers amid fierce competition.
In 2014, Hirai said Sony was being squeezed by competition from cost-cutting Chinese smartphone manufacturers and innovation from Apple and others. Sales at Sony’s mobiles division jumped 28.7% in the last quarter but Sony forecast the division would post a full-year operating loss of 215bn yen ($1.83bn), steeper than the 204bn ($1.74bn) loss it anticipated this past October.
While The Interview pulled in a (relatively) healthy receipt for a movie that looked set to be canceled, it did not help Sony’s motion-pictures division overall. Sales are expected to have decreased 11.7% year-on-year from 2013, as the studio released fewer movies and suffered in comparison with the preceding year, when its television unit released the hit show Breaking Bad on video on demand.
This article was written by Dominic Rushe in New York, for theguardian.com on Wednesday 4th February 2015 18.12 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010