Sony operating profit tumbles 90%

Worldwide economic slowdown, surging yen trim electronics giant's bottom line

by Hiroko Nakata

Sony Corp. said Wednesday that its group operating profit tumbled 90.1 percent to ¥11 billion for the July-September quarter from a year earlier, as the global economic slowdown hit sales of its gadgets and the surging yen ate into its profits.

The electronics giant’s group net profit also fell, down 71.8 percent to ¥20.8 billion. Sales were down 0.5 percent at ¥2.07 trillion.

However, the overriding reason for the deteriorating profits in the quarter was the sharp fall in the price of shares owned by Sony’s financial unit, Sony Life Insurance Co., according to Sony Chief Financial Officer Nobuyuki Oneda.

The staggering operating profit drop is also a reflection of profit logged in the same period last year, when the company sold real estate previously used for its headquarters, he said.

Even so, the global financial turmoil has hampered product sales of the export-driven firm.

In its largest sector — electronics — the firm’s group operating profit dropped 40.5 percent to ¥75.6 billion. Sales fell 0.6 percent to ¥1.65 trillion.

“Television prices have fallen rapidly recently. Particularly, prices in Europe and the United States are down sharply,” Oneda told reporters in Tokyo.

In the game sector, the group operating loss dropped to ¥39.5 billion from ¥96.7 billion. Sales grew 10.3 percent to ¥268.5 billion due to increased sales of PlayStation 3 video game consoles and PlayStation Portable devices.

Sony already announced last week it had lowered its profit and sales forecasts for the full year ending in March.

Tokyo-based Sony now expects a ¥150 billion group net profit for the year, down 59 percent from the previous year, citing as a cause recent unfavorable exchange rates.

A ¥1 rise against the dollar and the euro reduces its operating profits by about ¥4 billion and ¥7.5 billion for a year, respectively, Oneda said.

In July, Sony said it was expecting to post a ¥240 billion profit for the business year.

It also expects its group sales to inch up 1 percent to ¥9 trillion, and operating profit to fall 58 percent to ¥200 billion.

Toshiba falls into red

Kyodo News

Toshiba Corp. said Wednesday it fell into the red in the April-September period with a group net loss of ¥38.45 billion, due mainly to a continuing plunge in flash memory prices.

The company reported a half-year loss for the first time since the same six-month period in 2003. The loss compares with the ¥45.66 billion net profit logged a year earlier.

In its consolidated earnings report for the first half of fiscal 2008, which ends next March, Toshiba also logged a group operating loss of ¥23.47 billion, compared with a profit of ¥82.52 billion a year earlier on sales of ¥3.50 trillion, down 5.3 percent. It reported a pretax loss of ¥63.51 billion from a year-earlier profit of ¥76.78 billion.

Last month, the Japanese electronics giant nearly halved its full-year forecasts. It now projects a group net profit of ¥70 billion, down 45.1 percent from a year earlier, and a group operating profit of ¥150 billion, down 37 percent, on sales of ¥7.7 trillion, up 0.4 percent.