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Sony Fiscal Q1 Back in the Black

Tokyo – Kick-started by consumer electronics, Sony returned to profitability in its fiscal first quarter, reporting a 17 times increase in operating income in its first three months, to $436 million, compared with a $25.7 million in its first fiscal quarter last year. Net income for the first quarter hit $481 million, compared with a loss of $258 million in the year-ago period.

While sales in Sony’s consumer electronics business remained almost unchanged in the first three months, operating income enjoyed a significant increase. Sony said this was due to the “contribution of strong-selling consumer audio/video products – namely, televisions, digital cameras and video cameras. It also was attributed to the benefit of improvements in profitability from business unit restructuring and the transfer of its loss-making mobile phone business to an equity affiliate as a result of the establishment of a joint venture with Ericsson.

Sales in the CE segment reached $10.24 billion in the first quarter, a less than 1 percent decrease from the $10.46 billion recorded in the same three months last year. Operating income for the CE segment soared to $413 million, up dramatically from the $12.7 million registered in the same period in 2001.

Televisions took the lead in the CE segment, thanks to significant increases in sales of Wega TVs, including projection units, which registered a 27.7 percent increase in sales during the first quarter, hitting $1.6 billion, up from $1.3 billion in the first quarter last year.

Video products sales rose 5.7 percent in the first three months, to $1.8 billion, up from $1.7 billion in the previous year.

Only audio took a dip in sales in the first quarter, dropping 4.9 percent, to $1.4 billion, compared with $1.5 billion year over year.

Other CE products registering significant increases in sales were Vaio personal computers, especially desktops; digital still cameras; and Clie personal digital assistants. Products with significant decreases in sales were computer displays and car audio.

Sales in Sony’s Game segment also were about flat in the first quarter, dipping 1.1 percent, to $1.29 billion, down from $1.33 billion in the first quarter of last year. The Game segment registered operating income of $21 million, up from an operating loss of $26.8 million in the same three months in 2001.

Sony sales to the United States increased 11 percent in the first quarter, hitting $4.7 billion, up from $4.3 billion in the same quarter in 2001.

Looking ahead, Sony has revised its sales forecast for the fiscal year ending March 31, 2003, announced in April, down to $65 billion, from $67 billion. The company cites an increasingly difficult operating environment for the revised figure.

In regard to profit for the current fiscal year, Sony said several positive and negative factors essentially offset each other, resulting in no change in its company forecast overall. However, it does expect further improvement in CE profitability due to an increase in added value from more attractive products and greater material cost reductions, among others.

Regarding the performance of its loss-making subsidiary Aiwa, which Sony has decided to take private, effective Oct. 1, inventory as of June 30, 2002 was $4.8 billion, a 34.7 percent, or $2.6 billion decrease from the level at the same date in 2001.

Aiwa inventory increased 12.5 percent, or $550.5 million, by June 30, 2002, compared with the level on March 31 of the same year. Sony applied an $85.7 million restructuring charge in the first quarter toward Aiwa.