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Sony Q1 Sales Flat, CE Income Drops

Tokyo — Even with increased sales of flat-panel and LCD rear-projection televisions and digital cameras, sales in Sony’s consumer electronics segment remained basically flat in the company’s fiscal first quarter, coming in at $10.2 billion.

Operating income in Sony’s electronics segment took a big hit in the first fiscal quarter, ended June 30, dropping nearly 50 percent to $64 million from $124.4 million. Sony said the decline was due mainly to the appreciation of the yen and an increase in restructuring charges. In addition, any CE gains were offset by lower sales of CRT televisions and portable audio.

Sony’s video sales enjoyed the biggest CE boost in the first quarter, climbing 11.9 percent to $2.3 billion, up from $2 billion in the year-ago period. Audio sales slid 11.8 percent in the same three months, down to $1.2 billion, compared with $1.4 billion year-on-year. Sales of televisions in the first quarter increased 4.9 percent, reaching $1.8 billion, up from $1.7 billion in the same three months in 2003.

The game segment at Sony recorded a first quarter 15.9 percent decrease in sales, due primarily to declining sales of hardware, namely a drop in the United States in unit sales of PlayStation 2. Unit sales and revenue from PlayStation software decreased, but this was offset by a rise in unit sales and revenue from PS 2 software. Software revenue in the United States posted an increase in the first quarter year-on-year.

The game category recorded an operating loss of $27 million in the first quarter, due primarily to lower sales of software published by Sony Computer Entertainment.

Sony’s overall sales in the United Stated register a 9 percent drop in the first quarter, coming in at $3.9 billion, down from the $4.1 billion posted in the first quarter a year ago.

When flat sales in its music and pictures segments, and a sales decline in its financial services segment are combined with so-so numbers from the CE and games segments, consolidated Sony first quarter sales also were flat, hitting $14.9 billion, or less than a 1 percent rise.

Consolidated first-quarter operating income nose-dived 41.4 percent, down to $91 million in the first quarter, compared with $150.5 million in the same three months in 2003.

However, Sony did manage to record consolidated net income of $215 million in the first quarter, compared with $9.9 million in the same three months last year. A weak yen helped boost overseas sales, countering a weak demand for CE products in Japan. Sony said net income increased significantly, mainly because of the contribution from Sony Ericsson, the company’s healthy mobile phone-making partnership, as well as box office results from the summer release of Spider-Man 2.