Sony sales, profits sink in first quarter

Sony saw sales drop by almost a fifth in the April to June quarter and recorded losses throughout its electronic operations, it said Thursday.

The company, which has been struggling to restructure for the past several years and more recently fighting poor economic conditions and the strong Japanese yen, also warned it expects to lose money for a second year in a row.

Sony reported a net loss of ¥37 billion (US$388 million as of the last day of the period being reported) during the April to June period, a reversal from a ¥35 billion profit in the same period of 2008, as sales dropped 19 percent to ¥1.6 trillion.

Sony attributed the lower sales to the recession gripping many countries and the strong value of the Japanese yen, which has a double impact on its business. It makes Japan-made products more expensive overseas and reduces the value of profits from overseas business when the money is brought back to Japan. The average value of the yen was 7.5 percent higher in the quarter compared to the same period last year while against the euro it has soared by 23.5 percent.

In Sony's core electronics operations it registered losses at each of its three main divisions.

The consumer products and devices segment recorded a 27 percent drop in sales as consumers bought fewer Bravia LCD televisions, Cybershot digital cameras and Handycam video cameras. An operating loss of ¥2 billion was reported versus a profit of ¥36 billion last year.

The networked products and services division, which includes the PlayStation gaming products and Vaio computers, saw a 37 percent drop in sales. This was mainly due to lower sales of Vaio PCs. Consumers have been choosing cheaper netbook PCs over traditional laptops or putting off purchases altogether because of the economy or upcoming launch of Windows 7. The division recorded an operating loss of ¥40 billion against a profit of ¥5 billion last year.

Sony's business-to-business and disc manufacturing operations registered a 28 percent drop in sales as an operating profit of ¥9 billion in last year's April to June quarter was turned into a loss of ¥12 billion this year.

Across Sony's electronics operations there were few bright spots. In Japan sales of digital music players increased against the same period a year ago and Sony increased its full-year sales target from 6.3 million players to 6.7 million players, although that's still less than the 7 million it sold last year.

Better results were recorded in Sony's non-electronics divisions with its pictures, music and finance divisions all increasing sales and all reporting operating profits.

For the full year, from April to March 2010, Sony expects its results to be worse than last year. Sales are predicted to fall 6 percent to ¥7.3 trillion with a net loss of ¥120 billion. In the previous fiscal year Sony recorded a net loss of ¥99 billion.

Copyright © 2009 IDG Communications, Inc.

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