Originally created 04/28/04

Sony's profits slide 23 percent for year



TOKYO -- Sony Corp. posted a narrower loss for the fourth quarter but its profit dropped 23 percent for the full fiscal year as it accelerated layoffs and its electronics, movie and video-game businesses foundered.

The Tokyo-based electronics and entertainment giant said Tuesday it expected earnings would rebound in the current year as cost-cutting efforts make an impact and new products drive sales.

In the January-March quarter, Sony's net loss narrowed to 38.2 billion yen ($352 million) from 111 billion yen in the same period a year earlier. Sales rose 7.1 percent to 1.77 trillion yen ($16.3 billion) from 1.65 trillion yen.

Sony posted a group net profit of 88.5 billion yen ($815.16 million) for the year ended March 31, down from 115.5 billion yen a year earlier.

Sony's once-trendsetting electronics division swung to an operating loss for the year, while its video-game and movie businesses each posted 40 percent declines in operating profit.

Group sales edged up 0.3 percent to 7.49 trillion yen ($69.03 billion) for the year from 7.47 trillion yen a year earlier.

Sony has been struggling to overhaul its business over three years by eliminating tens of thousands of jobs. It has faced intense rivalry from U.S., South Korean and other manufacturers that have shifted plants to countries where labor costs are low.

The company said a 168 billion yen ($1.55 billion) companywide overhaul hurt operating profit. Of the total, Sony spent about 143 billion yen ($1.32 billion) to accelerate layoffs at its ailing electronics operations, it said. The company spent 106 billion yen on restructuring the previous year, and expects to spend 130 billion yen ($1.20 billion) this year.

Nobuyuki Idei, chairman and chief executive, said Sony was counting on new products to boost earnings this year, including next-generation microprocessors, portable entertainment systems and online music sales.

The company's core electronics segment recorded an operating loss of 35.3 billion yen ($325 million) last year after a 41.4 billion yen profit a year earlier. Sony said market price declines affected televisions, personal digital organizers, portable CD players and optical equipment, but that mobile phone, digital camera and flat-screen television sales gained.

Operating profit in the game division dropped 40 percent for the year to 67.6 billion yen ($623 million) from 113 billion yen on rising research and development costs and falling game console sales. Sales of the PlayStation 2 shrank, with a drop in shipments to the United States offsetting gains in Europe and Japan. Worldwide, Sony shipped 20.1 million PlayStation 2 consoles last year, down 10.7 percent from 22.52 million the previous year.

Operating profits at Sony's movie business fell 40.3 percent for the year to 35.2 billion yen ($324 million) from 59.0 billion yen the previous year. The company attributed the plunge to a failure to deliver a blockbuster to match the previous year's hit, "Spider Man."

However, Sony Music Entertainment rebounded with an operating profit of 19.0 billion yen ($175 million) following a 7.9 billion yen loss, as advertising, overhead and restructuring costs were reduced.

For the fiscal year through March 2005, Sony forecast a group net profit of 100 billion yen ($920.9 million) and sales of 7.55 trillion yen ($69.63 billion).

Sony shares had fallen 1.28 percent to 4,610 yen ($42.50) at the close of trading Tuesday on the Tokyo Stock Exchange.