Sony Corp. posted a loss of $1.2 billion in its second-quarter financials, a decrease of almost 1900 per cent compared to September of last year – and Canadian retail stores are paying the price.

David Cray, an associate professor at Carleton’s Sprott School of Business, said Sony’s inability to compete in the PC and smartphone markets against heavyweights such as Apple and Samsung have diminished profits.

It’s been bad news for shareholders – Sony won’t pay interim or year-end dividends to its shareholders for the 2014 fiscal year. Its stock, already on the negative side of the equation, plummeted over 500 per cent in one year.

The Japanese company has faced heavy competition in their mobile communications sector, losing almost $2 billion between September of 2013 and the same month in 2014. In their second quarter financials, Sony characterized the smartphone market as having “severe price competition… rapid development in technology and subjective and changing consumer preferences”, making it difficult to stay viable in the market. Cray said that while companies like Apple and Samsung have edged Sony out of the market, Asian companies have also taken profits domestically.

Competition in the PC sector is also a problem for Sony. Many customers prefer to enjoy music and play videos on their computers or tablets, said Cray. In previous years Sony had been labouring to make profits with its VAIO computer business, again wrestling with extreme competition from the likes of Apple. In July of 2014, Sony sold its computer business to a Japanese company due to poor sales. While selling VAIO relieved Sony of expenses, it will leave the company crippled in the PC sector.

Sony Corp. has taken other steps to bring its balance book back into the black. In the six months after its last yearly report in March of 2014 it laid off 12 per cent of its total work force – 1,782 employees.

Sony’s recent decision to close all 14 of its Canadian stores, leaving 90 people unemployed, was another move to shed costs.  A statement in its second quarterly financial statement said that Sony would withdraw from any countries where there was “poor prospect for profitability” in its mobile communications segment. Its performance in Canadian markets hasn’t been a high point. Canadian revenues are lumped in with the Middle East, Africa, Brazil and Mexico. The revenue of these five regions has yielded the equivalent of over $10 billion in revenue – a mere ten per cent of Sony’s total sales and operating revenue from 2013.

Sprott’s David Cray suggested that another reason that Sony is jettisoning its retail stores in Canada is the “increasing reliance” of Canadians on online purchases. According to a Canadian Ipsos Reid Report poll in July of 2014, eight out of ten Canadians have made a purchase online in the last year. This trend has been diminishing returns for Sony’s retail stores, as well as helping force stores like Target out of the country.

While one can speculate about the Canadian closures, the specific reasoning behind the decision is shrouded in mystery. In an email, a representative of Sony Canada said he couldn’t talk about the Canadian store closures or Sony’s financial struggles.

Sony expects to incur $897 million in nebulous “restructuring costs” at the end of the fiscal year in March, which hints at more changes in the near future.

However, Sony hasn’t been forthcoming about its financial woes or its plans to spring back in the upcoming fiscal year – calls to the corporation weren’t returned and email responses wouldn’t comment on the future.