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Sony CE Sales Flat, Profit Down

1/27/2005 09:40:00 AM Eastern

Tokyo — Sony reported flat fiscal third-quarter sales for its electronics segment, as well as a decline in third-quarter operating income for the company’s CE business.

The company said increasing sales of flat-panel and LCD rear-projection TVs and digital cameras could not counter the impact of eroding price points for DVD recorders, TVs and video cameras on sales and profits.

Sony CE segment sales came in at $14.7 billion for the three months, ended Dec. 31, down nearly 1 percent from the $14.8 billion reported in the same quarter last year. Sony said flat-panel TVs and digital cameras enjoyed unit sales increases in all its geographic selling areas, while LCD rear-projection TVs saw increased unit sales, especially in the United States. However, Sony noted a decline in CRT television sales, with the company faced with a shift in demand toward flat panel.

CE segment operating income in the third quarter declined 23.3 percent, down to $479 million from $625.1 million in the same quarter in 2003.

Overall video sales at Sony climbed 6.1 percent in the third quarter, to $3.1 billion, up from $3 billion the previous year. Television sales rose 3.9 percent in the three months, reaching $3.1 billion, up from a year-on-year $3 billion. Audio sales in the period declined 16.2 percent, down to $1.8 billion from a year-ago $2.1 billion.

An increase in software sales in Sony’s game segment during the third quarter was more than offset by a decline in hardware sales, resulting in an overall 23 percent drop in game segment sales, to $2.7 billion from a year-ago $3.6 billion. Operating income in the quarter for the game segment slipped 36.8 percent to $433 million from $684.3 million.

Sony registered a decline in PlayStation2 unit sales in the United States, as well as incurred strategic price reductions, compared with the same quarter last year, leading to a third-quarter decline in PS2 dollar sales. Software sales revenue decreased in the United States, but overall software sales increased as a result of an increase in unit sales and revenue for PS2 software.

For the nine months, CE segment sales edged downward 1.2 percent to $37.4 billion from a year-earlier $37.8 billion, while nine-month operating income came in at $632 million, off 46.8 percent from the $1.2 billion reported in the same period in 2003.

Game segment sales for the nine months dropped 22.3 percent to $4.9 billion from a year-ago $6.3 billion, with operating income plunging 44 percent to $405 million from $722.8 million in the same nine months the preceding year.

Breaking out Sony’s CE segment sales further, video sales climbed 10 percent in the nine months, to $8 billion from $7.3 billion in the same period a year ago. Television sales for the period rose 3.4 percent to $7.1 billion from $6.9 billion, while audio sales dropped 14.4 percent to $4.5 billion from $5.3 billion, compared with the same nine months in 2003.

A 60 percent drop in Sony’s music segment sales in the third quarter, combined with the slide in games, pushed consolidated Sony sales down 7.5 percent to $20.9 billion, compared with $22.6 billion the previous year. Operating income in the third quarter was off 13 percent, down to $1.3 billion from a year-ago $1.5 billion. Net income, however, rose 55.3 percent in the three months, to $1.4 billion from $898.9 million year-on-year, as Sony recorded a 55 percent increase in profit on home entertainment revenue from its Spider-Man 2 movie.

Sony sales in the United States were flat in the third quarter, coming in at $6.27 billion, compared with $6.32 billion in 2003. For the nine months, sales in the United States dropped 6.5 percent to $14.8 billion from $15.8 billion.

Sony reported restructuring charges of $102 million in the third quarter, down from $520.3 million in the same three months in 2003. CE segment restructuring charges in the third quarter were $101 million, compared with $458 million year-over-year.

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