Sony sinks into the red in Q1

Sony announced yesterday that its operations slipped into the red during the quarter ended June 30, the first of its current financial year.

Sony announced yesterday that its operations slipped into the red during the quarter ended June 30, the first of its current financial year.

Despite posting a 5.4% increase in sales to 1.6 trillion yen ($US15.5 billion), the company saw operating losses at almost all of its business units contribute to a net loss after accounting changes of 88.3 billion yen for the three month period.

Its electronics business offered one of the few high points during the quarter. Solid double digit gains in sales of televisions, personal computers, digital still cameras, semiconductors, home stereos and DVD-Video players helped the unit increase sales by 10% to 1.1 trillion yen and almost quadruple operating income to 55.2 billion yen, the company said in a statement.

In the game business, Sony saw a big drop in shipments of its first generation PlayStation games machine. The company managed to ship just 630,000 units during the first quarter compared with 4 million in the same period a year earlier. The company blamed component shortages for the lower shipments.

Overall, the game business posted a 3.5% drop in sales and sank into the red by 16.0 billion yen, the latter a result of the high start-up costs associated with launch of its PlayStation 2 console in Japan. During the period, shipments of the new console totaled 1.13 million units.

Elsewhere, Sony saw sales rise at its movies and insurance businesses, while the music business recorded a drop in sales. Operating profit increased at the insurance unit but both Sony Music and Sony Pictures dropped into the red at operating level.

Sony also revised its forecasts made in April for the current financial year, ending March 31, 2001. The company now expects sales to hit 7.2 trillion yen, an 8% increase on the previous year. Operating income is predicted to be 230 billion yen, pretax income to be 255 billion yen, and net income 10 billion yen. The latter is an almost 110 billion yen downgrade on the last forecast as a result of a new accounting law in the U.S. that changes the way Sony Pictures records expenses.

Sony Corp. Q1 Results (all figures in billions of yen unless noted)

Q1 1999Q1 2000Percentage change
Sales and operating revenue1,482.31,561.8+5.4%
Operating income42.233.7-20.1%
Pretax income42.839.1-8.6%
Net income18.4-88.3n/a
Net income per share (basic)22.5 yen-96.9 yenn/a
Sony Corp., in Tokyo, is online at http://www.sony.co.jp/.

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