Sony Counting On PlayStation 3 And Flat TVs - InformationWeek

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4/28/2006
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Sony Counting On PlayStation 3 And Flat TVs

Sony is forecasting sharp falls in operating profits at many of its divisions for the year ahead as it reported a Yen 66.5 billion ($581 million) loss for the January-March quarter, worse than the Yen 56.5 billion ($501 million) loss in the same period last year.

LONDON — Sony is forecasting sharp falls in operating profits at many of its divisions for the year ahead as it reported a Yen 66.5 billion ($581 million) loss for the January-March quarter, worse than the Yen 56.5 billion ($501 million) loss in the same period last year.

It is the fifth year in a row in which the firm has made losses in the final fiscal quarter.

Sales for the quarter were up 8.7 percent to Yen 1.85 trillion ($20 billion).

The group said operating profit for 2006-07 would fall 48 percent to Yen 100 billion ($ 872 million) well below previous forecasts of Yen 171.2 billion.

Projected sales for next year were Yen 8.2 trillion ($71.4 billion) an increase of 10 percent.

However, Sony said its core electronics division was recovering and that sales of flat TVs was booming, while sales of the portable PlayStation were ahead of forecasts.

It also suggested any fully fledged recovery would depend on the successful launch in November of its PlayStation3 games console. Start-up costs for the PS3 3 will push its game division deep into the red, the company said.

"We believe that we can lower costs dramatically [on the PS3] through chip shrinkage and by cutting the number of parts, but there is no way to avoid high costs in the first year," said Sony Senior Vice President Takao Yuhara.

Under its Welsh-born chairman, Sir Howard Stringer, Sony is streamlining its operations by ditching product ranges, closing factories, selling off assets and cutting 10,000 jobs worldwide.

The firm said it had saved Yen 38 billion ($33 million) in fiscal 2005.

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