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Sony Downwardly Revises Fiscal Year Outlook

9/28/2001 04:02:00 PM Eastern

Tokyo - Faced with a downward spiral in consumer electronics sales, namely in the United States - as well as a drop in semiconductor and personal computer-related products sales - Sony has revised its consolidated financial forecast for its fiscal year ending March 31, 2002.

The giant audio-video products maker said its expects its electronics division will report a single-digit-percentage sales decline for the 12 months.

Sony, which revised its consolidated results forecast made July 26, now is looking for sales and operating revenue of $62.8 billion, down from the original prediction of $64.5 billion. However, the new forecast still places sales and operating revenue 3 percent above the previous fiscal year.

Consolidated operating income has been sharply revised downward, to $1 billion, from the $2.1 billion forecast earlier in the summer. This new figure is 47 percent below the dollar amount recorded in the previous year.

Sony expects consolidated income before taxes will now reach $586.1 million, down from the $1.7 billion predicted in July. This new figure is 74 percent change from the previous year.

Consolidated net income is now expected to hit $83.7 million, a sharp drop from the $753.5 million predicted earlier in the year.

Sony said it valued 120 yen to the dollar in its forecast of last July, compared with 115 yen to the dollar for the current forecast.

Last April, Sony had predicted the year's net profit would reach $1.2 billion. At that time, it said it predicted overall operating income for the year of $2.4 billion.

Looking at reasons for the downward revisions, Sony said the new forecast reflects the estimated impact of greater worldwide economic deceleration than it expected in July. This impact includes a preliminary estimate by management of the effects of the U.S. terrorist attacks on Sept. 11. However, Sony said further ramifications of these events remain uncertain, making it difficult for Sony to estimate the overall impact of these events at this time.

Sony said sales in its overall electronics business are expected to remain at a level just below the forecast in July. However, profit performance in such categories as semiconductors and personal computer-related components is expected to deteriorate significantly due to a slowdown in sales.

Sony expects to add about $251.2 million to its restructuring expenses, boosting the total for the year to about $418.6 million. These additional expenses are designed to help the company focus on key businesses and reduce fixed costs. In addition, Sony expects financial results at its Aiwa subsidiary to further deteriorate.

Because of its current severe operating environment, Sony intends to focus on key businesses. This includes reducing its presence in, or withdrawing from 48 product categories, including the 28 product categories specified in the previous year. The company also said it also will reduce fixed costs at Sony and at manufacturing and sales subsidiaries.

Of the $418.6 million being spent on restructuring, $251.2 million is for the purpose of discontinuing unprofitable businesses and reducing redundant assets. About $167.4 million is for the purpose of facilitating such measures as early retirement of employees in Japan, the United States and Europe

Sony will issue its financial results for the second quarter and first half on Oct. 25.

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