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Friday, Oct. 26, 2007
Sony profit up fourfold despite PS3 woes
Despite continuing to sustain heavy losses in its game business, Sony Corp.'s group net profit increased fourfold to ¥140.2 billion in the six months through September compared with the same period last year, thanks to vigorous sales of digital cameras and computers.
Sony's operating profit jumped to ¥190 billion in the April-September period, up from ¥6.2 billion the year before, because last year the electronics company booked a ¥51.2 billion charge to cover the cost of replacing faulty lithium-ion batteries.
The approximately ¥60.7 billion it raked in from selling property related to its former head office in Tokyo's Shinagawa Ward also helped boost profits.
Meanwhile, sales increased 12.8 percent to ¥4.06 trillion.
However, the U.S. housing loan crisis might cast a shadow on the electronics manufacturer's business in the second half of this business year.
Nobuyuki Oneda, Sony's chief financial officer, said sales in October are dropping, apparently due to falling consumption brought on by the subprime mortgage crisis. Rising oil prices are also going to push down profits, he said.
"But at this point in time, the situation has not come to a place where we need to greatly revise our (2007) business forecast," Oneda said.
In the first half of business 2007, Sony's game division posted an operating loss of ¥125.9 billion, up from a ¥70.3 billion loss in the same period the year before, even though sales for the games division came to ¥440 billion, up 50.3 percent.
Tatsuyuki Sonoda, general manager of Sony's investor relations division, said the large loss was caused by PlayStation 3 price cuts and the depreciation of PS3-related inventories.
Sony slashed PS3 prices from $599 to $499 in the U.S. market, and from ¥49,980 to ¥44,980 in Japan for its 20-GB model, drastically slashing profit margins.
In addition, the depreciation of PS3 inventories led to ¥71.1 billion in losses, Sonoda said.
As for its core electronics business, Sony posted a ¥191 billion operating profit, up from ¥55.4 billion, thanks to strong sales of digital cameras and computers.