Sony profits fall 98%

The Japanese electronics giant, Sony, announced today that its sales and profits have dropped dramatically as it implements a major restructuring plan.

The company announced that its net income in the first quarter of the year fell by 98% to £5.5 million. The company blamed the cost of restructuring and a fall in sales in almost all of its areas.

Sales of televisions, videos, PCs, Playstation 2s (PS2) and its games have all caused Sony’s profits to fall.

Sales across the company have fallen by 6.9% when compared to the same three months a year ago. Sales of electronics (TVs, videos and PCs) fell by 9.8% whilst the video games sector saw its sales fall by 18.9%. Sales in the company’s music segment decreased by 8.8%, but the company highlighted an improvement in music sales in Japan and an improvement in the company’s US music subsidiary’s efficiency.

The only sector of the company to report an improvement in sales was Sony’s financial services sector which offers credit cards and life insurance. Sales in the company’s financial services sector improved by 16.3% to £72.7 million.

Nobuyuki Idei, Chairman and Group CEO of Sony commented, “During the first quarter ended June 30, 2003, Sony began preparations to implement our restructuring plan and growth strategy while, at the same time, improving the competitiveness of our products, primarily in the Electronics segment. Although consolidated financial results during the quarter were weaker than those achieved in the same quarter of the previous year, they improved significantly compared to the fourth quarter ended March 31, 2003, in which a loss was recorded.”

Sales of the PS2 have decreased by 1.94 million units and revenues from the hardware were hit because of price cuts in the US and Europe for the console. However, revenues and sales on the PS2 increased in Japan due to the release of a new model. Games sales for the PS2 increased by 4 million units over the three months to the end of June 2003.

The company claimed that it is working to improve its profitability before 2006 when Sony celebrates its 60th anniversary.