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Wednesday, Jan. 31, 2007
Sony sees 15% fall in profit for quarter
Sony Corp. said Tuesday its group operating profit in the October-December period plunged 14.9 percent from 2005 to 178.9 billion yen due to the cost of launching the PlayStation 3 in November.
Sony posted a net profit of 159.9 billion yen, down 5.3 percent from the same quarter of 2005, on sales of 2.6 trillion yen, which jumped 9.8 percent.
Although Sony suffered a loss in its game sector, its electronics business raked in an operating profit of 177.4 billion yen, or twice as much as in the same period last year, on sales of 1.87 trillion yen thanks to brisk sales of Bravia flat-panel TVs.
Sony boasted that it captured the top share of 30 percent in the liquid crystal display TV market worldwide during the yearend shopping season.
"We focused on big-size and high-quality displays, and it was taken well by consumers," said Takao Yuhara, a Sony executive.
Meanwhile, Sony posted an operating loss of 54.2 billion yen in its game business, down from a profit of 67.8 billion yen in the same period last year.
Nobuyuki Oneda, chief financial officer of Sony, said the total cost for PS3 components is still higher than the console's price tag, as is often the case when a new video game machine is introduced.
Sony's decision to slash the PS3 price from the initially planned 62,790 yen to 49,980 yen also hurt profit, Oneda said.
The company had to push back the PS3 launch in Europe because of production problems and could only make 100,000 units available for the Japan debut in November and 400,000 for its U.S. debut a week later.
Sony also faces an uphill battle against rivals Nintendo's Wii video game console and Microsoft's Xbox 360.
Sony hoped to sell 2 million PS3s worldwide by the end of last year, but shipments reached only 1.84 million units.
Sales of its PlayStation Portable also failed to meet its target in the October-December quarter, reaching a mere 1.76 million units, down from 6.22 million units in the same period of 2005.
For the full business year to March, Sony revised upward its group net profit estimate to 110 billion yen from an earlier forecast of 80 billion yen, thanks to the electronics division's strong earnings growth for the October-December quarter.
The increased estimate for the full year is still down 11.0 percent from the previous year.
Sony also raised its consolidated pretax profit estimate for the year to 80 billion yen from the 70 billion yen forecast in October. The revised estimate represents a 72.1 percent plunge from the previous year.