Sony Corp. said it expects the costs arising from the online security breach to hurt operating profit by about 14 billion yen (US$170 million) in the fiscal year ended March 31, 2012.

Sony shut down its Playstation network in April after a security breach in its PlayStation Network and Qriocity services. Sony said that the hackers stole personal information -- including names and e-mail addresses -- from all of 77 million Playstation Network and Qriocity service accounts, including credit card information of 12.3 million account holders. The services partially resumed in the U.S. and Europe earlier this month, but not after a rush of building a new system that has more firewalls, an offer to provide $1 million identity theft insurance per customer, month-long free play for affected customers, and lost revenues because of the month-long shut down.

The $170 million charge is well below the $1 billion estimate by some analysts. However, Sony is not smiling with the lower charge as it has failed to avoid a third straight year of red ink.

Sony said Wednesday that it expects to post a $3.2 billion net loss for fiscal year ended March 31, 2011, due to a write-off on a certain portion of deferred tax assets in Japan due to the March 11 earthquake and tsunami.

Sony said fiscal year ended March 2011 sales are expected to be 7.18 trillion yen, from the 7.2 trillion yen forecast in February. Sony still expects to achieve approximately 200 billion yen in operating income, 6.3 times the previous year's amount and in-line with its February forecast. However, Sony expects a net loss of 260 billion yen ($3.18 billion), a significant downward revision from its February forecast of a profit of 70 billion yen.

The expected net loss is due to the expected recording of an approximately 360 billion yen ($4.4 billion) valuation allowance against deferred tax assets at Sony Corporation and its group companies subject to consolidated taxation in Japan.

Quake impacts earnings by $2 Billion

Sony estimates the impact of the Earthquake on sales for the fiscal year ended March 2011 to have been approximately 22 billion yen ($270 million) and the impact on operating income to have been approximately 17 billion yen ($200 million). As for the impact on operating income, the 12 billion yen is on account of idle facility costs at manufacturing sites, and the 5 billion yen is estimated as a net margin loss associated with a decrease in sales resulting from the Earthquake. An additional 11 billion yen in expenses on account of restoration costs related to inventory, machinery and buildings damaged at manufacturing facilities are expected to be covered by insurance.

In addition, at present, Sony estimates that the impact of the Earthquake on consolidated operating income for the fiscal year ending March 2012 to be approximately 150 billion yen ($1.8 billion).

Following the disaster in March, Sony temporarily closed 10 plants in and around the quake-hit region. While most of the plants have resumed operations, many suppliers have also been affected by the quake, and the supply-chain is still expected to "recover significantly" in the second half of the fiscal year, according to Chief Financial Office Masaru Kato.

PlayStation cyber-attack

Sony said that currently known associated costs for the fiscal year ending March 2012 on account of the security breach are estimated to be approximately 14 billion yen on the consolidated operating income level.

The estimated amount includes, among other things, current estimated cost of the personal information theft protection program for customers; costs of welcome back programs that offer our customers certain services (such as games, music and videos) for free; customer support costs; network security enhancement costs; legal and expert costs; and the impact on profits due to a possible future revenue decrease.

"These amounts are our reasonable assumption based on the information currently available to Sony. So far, we have not received any confirmed reports of customer identity theft issues, nor confirmed any misuse of credit cards from the cyber-attack. Those are key variables, and if that changes, the costs could change," Sony said.

The Japan electronics giant added that in connection with the data breach, class action lawsuits have been filed against Sony and certain of its subsidiaries and regulatory inquiries have begun. However, as the suits are all at a preliminary stage, it is not able to include the possible outcome of any of them in its results forecast for the fiscal year ending March 2012 at this moment.