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Sony struggles on slugglish PS2 sales
Thursday, January 25 2001
by Rory Kelleher


Sony's group operating profits dropped 11 percent to YEN146.47 billion(USD1.27
billion) in the last three months due to production glitches with PlayStation 2.

The company said it was also facing difficulty because of the strength of the
yen. This decrease came in the crucial October to December period, which usually
provides more than 50 percent of the company's total profits.



The results were slightly better than analysts' expectations of a 15 percent to
27 percent fall.



While overall sales were up 10 percent to YEN110.4 billion (USD18.4 billion), the
company has been forced to halve its full year net profit forecast to USD42.6
million for the year to March. Operating profits are expected to increase 8
percent.



Sony's game division posted an operating loss of YEN13.93 billion for the
quarter, down from a profit of YEN57.54 billion a year earlier.



"The game unit's losses will expand in the fourth quarter, but should bottom
out before March," said Sony executive deputy president and chief financial
officer Teruhisa Tokunaka.



The group cuts its sales forecast for PlayStation 2, with shipments for the
current financial year being cut to 9 million from 10 million. The company cited
slower than expected software sales and production problems as the root cause.



He predicted profits for the unit by the middle of the next business year.



Since the March launch of the latest version of PlayStation, Sony's shares have
fallen around 45 percent.



Tokunaka said the growth of demand for personal computers, mobile phones and
devices particularly in the US and Europe was expected to experience a major
reduction.



Sony's group net profit declined 23 percent year on year to YEN72.74 billion in
the third quarter.



Tokunaka blamed the decline in net profits for the full year to heavy losses at
Aiwa, an electronics subsidiary of which Sony own 50.5 percent.



However, Sony's electronics division put in a strong performance with operating
profits increasing by 53 percent. Profits at its music division rose 8 percent
but the company's struggling movie business posted a 70 percent drop in profits
to YEN2.33 billion.