Sony's sales, profits jump but PS3 misses target

Strong sales of digital consumer electronic gadgets helped Sony achieve higher sales and net profit

Strong sales of digital consumer electronic gadgets helped Sony achieve record sales and higher net profit in the financial year just-ended but shipments of PlayStation 3 consoles missed their target, the company said Wednesday.

The company reported a net profit of YEN 126.3 billion (AUD$126 million) for the year from April 2006 to March 2007. That's a 2.2 percent increase on profits from the year earlier. Sales hit an all-time high of YEN 8.3 trillion, up 10.5 percent over the previous year. Compared to Sony's most recent estimates, which were revised in January , those figures are respectively 14.8 percent and 0.8 percent higher.

Sony's core electronics segment saw a healthy 16.9 percent increase in sales and profitability on the back of an ongoing restructuring plan. The Japanese manufacturer, which has ended several unprofitable product lines, said it plans to stop making CRTs (cathode ray tube) and Vaio desktop computers.

"The electronics segment showed a remarkable recovery," said Nobuyuki Oneda, Sony's chief financial officer, at a Tokyo news conference.

Sales of Bravia LCD (liquid crystal display) televisions more than doubled to 6.3 million sets in the year and Sony said it expects to sell 10 million sets this year. After arriving late in the LCD TV market, the company has gone on to become one of the strongest players in the sector and anticipates its LCD TV business will finally turn an annual profit in the current year.

Other strong selling products included digital still cameras and Vaio laptop computers, said Oneda. Sony sold 17 million digital still cameras in the year and expects to sell 20 million this year as consumers continue to snap up the CyberShot.

Not all product sectors had a good year, however.

Sony's portable audio business, which was badly hit by the success of Apple Inc.'s iPod, reported flat sales of 4.5 million units. Sony had been hoping to sell 5.5 million Walkman players in the year. The company has set a goal of 5 million for the current year.

"We would like to make a comeback and return," said Oneda of the business. He said Sony aims to achieve this with new players that offer both audio and video playback.

The largest losses in the electronics sector came from the batteries business, which recorded a ÂYEN 51.2 billion charge due to the global recall of faulty batteries. That recall is progressing according to plan and Sony doesn't anticipate costs to be above estimates, the company said.

Sony's games business recorded a 6 percent increase in sales and losses of YEN 232.3 billion. The losses were largely the result of start-up costs for the PlayStation 3 and the effects of a price cut that Sony made on the console prior to its launch in Japan. A total of 5.5 million PlayStation 3 consoles were shipped between the November launch and the end of March. That's below Sony's target of 6 million. The company cited production delays that have now been fixed.

The shipment numbers count consoles as they leave Sony's factories and include those in warehouses and en route to retailers. The number of consoles sold to retailers stood at around 3.6 million, said Oneda.

For the current fiscal year Sony anticipates record sales of YEN 8.78 trillion and significantly higher net profit of YEN 320 billion.

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Martyn Williams

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