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Sony expected to report lower earnings

Sony expected to report lower earnings

Japanese electronics and entertainment company Sony Corp. reports second quarter earnings on Wednesday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Like other major Japanese exporters, Sony is seeing sales battered as worried consumers in the U.S. and Europe curtailed shopping for flat-panel TVs, digital cameras and other gadgets amid looming financial uncertainty. The plunging dollar and euro are also eroding Sony's massive overseas earnings when converted back into yen.
Over the last three years, Tokyo-based Sony, which makes Walkman portable music players and PlayStation 3 game consoles, has been revamping its core electronics sector, dropping unprofitable businesses and wiping out losses in its game division, under Chief Executive Howard Stringer.
But that gradual recovery appears to be endangered by the global financial crisis and accompanying economic slowdown.
BY THE NUMBERS: Sony is forecasting a 21 billion yen ($215.2 million) profit for the July-September period, down 72 percent from 73.7 billion yen for the same period last year. Sales are expected to inch down 1 percent year on year to 2.07 trillion yen ($21.2 billion). Last week, Sony slashed its profit forecast for the fiscal year through March 2009 to 150 billion yen (US$1.5 billion), marking a 59 percent nose-dive from the previous year. Analysts surveyed by Thomson Reuters, on average, expect fiscal year profit of 196.7 billion yen (US$1.9 billion).
ANALYST TAKE: Osamu Hirose, analyst at Tokai Tokyo Securities Co., says investors fear worse news lies ahead for Sony, which may need a costly reshaping of its production to better protect against currency fluctuations. "There is no assurance that the numbers may get worse," he said. "And tough times are expected for the year-end shopping season." Analysts say that Sony loses more than 7 billion yen (US$70 million) for each 1 yen gain against the euro, and 4 billion yen (US$40 million) for each 1 yen gain against the dollar.
WHAT'S AHEAD: The year-end shopping season is critical for Sony, and the rapid price drops of liquid-crystal display TVs and other gadgets from global competition threaten Sony's performance. Sony has been investing in display production and making Sony BMG, its music unit, a fully owned subsidiary. How PlayStation 3 and PlayStation Portable fare with Christmas shoppers against rival offerings will also serve as a test for Sony. Microsoft Corp. has slashed prices to boost sales of its Xbox 360 machine, and Nintendo Co. has a big hit in its Wii and DS.
STOCK PERFORMANCE: Sony shares have tumbled by about 50 percent in the last three months amid a plunge on the Tokyo market to below 2,000 yen. The stock closed Monday down 151 yen, or 7.7 percent, at 1,821 yen.


Updated : 2021-07-29 21:32 GMT+08:00