Sony Corp Report Q3 Profit Fall News
Chris Leyton
27/01/2005
The sliding costs of electronic products and continued dwindling sales of the Playstation2 leads to a slight drop in profits...
Sony Corp today announced a 13% drop in its quarterly profits, down from 158.8 billion yen last year to 138.17 billion yen during the October-December period; whilst sales during the period tumbled by 7.5% to 2.15 trillion yen.
The reason behind the slight decrease has been attributed to the sliding prices of consumer electronic products, such as TVâs, DVD recorders and video cameras, along with Sonyâs inability to compete against Apple and the iPod in the portable music market.
Given Sony had previously slashed its profits forecast for the full-year, it comes as little surprise, however the Japanese firm did reiterate its forecast for a group operating profit of 110 billion yen for the full year to March 31st 2005, down from previous expectations of 160 billion yen made in October.
Many of Sonyâs rivals have also seen weaker profit margins, although both Sharp Corp and Matsushita have maintained strong reports because they produce the vast majority of components in-house, allowing them to have a stronger control over costs. The need to cut costs however has been noticed by Sony Corp, who is half-way through a three-year, 335 billion yen restructuring plan dubbed âTransformation 60â, which is designed to reduce costs and secure supplies of components in order to boost profit margins.
Sonyâs electronic division, which accounts for close to two-thirds of the groupâs revenue, reported a 23.3% decline in its quarterly operating profits to 49.4 billion yen; whilst continued dwindling sales of the Playstation2 also impacted its games division, who reported a 37% decline in operating profits for the period to 44.6 billion yen as sales dropped by 23%.
Sonyâs picture and film division however was cause for celebration, representing a rise of more then 300% to 18.6 billion yen, based upon the strong success of Spider-Man 2 on DVD/VHS along with the Seinfeld TV series.
Naturally the recent release of the Sony PSP is set to give the game division a boost, with plans already announced to increase production to 2 million units early in 2005 and close to 3 million during the peak Christmas shopping season.