TOKYO (AFP) — Japan's Sony Corp. said on Wednesday its operating profit plunged 90 percent in the second quarter of the financial year, hit by a surging yen, a weak global economy and intense price competition.
Operating profit dropped to 11.0 billion yen (113 million dollars) in the three months through September, down from 111.6 billion in the same period of the previous year, a company statement said.
The electronics and video-game giant, which last week slashed its full-year forecasts, was pessimistic about the upcoming holiday shopping season.
"The expectations being factored in are that Christmas sales will be considerably negative," Sony's chief financial officer, Nobuyuki Oneda, told a news conference.
"But we cannot predict what sales will be like after Christmas."
In the second quarter, net profit plunged 72 percent to 20.8 billion yen as revenue dropped 0.5 percent to 2.07 trillion yen.
The figures were in line with preliminary results given by the group last week in its forecast revision.
The steep fall was partly due to a slump in the Japanese stock market, which hit Sony's financial services business. The year-earlier figure was also inflated by the sale of a portion of the site of Sony's former headquarters.
Sony said it has cut its sales target for liquid crystal display televisions to 16 million units this financial year from a previous 17 million due to tough competition.
"The decline in prices (of televisions) is now steeper particularly in the United States and Europe," Oneda said.
"Considering foreign exchange and other issues, we cannot avoid suffering a considerable loss," he said, adding it would be hard to return to the black in the television business over the next few years.
The yen soared this month to a 13-year high against the dollar due to the global market crisis, causing headaches for Japanese exporters whose products become less competitive overseas.
But in the video game sector, losses more than halved to 39.5 billion yen thanks to a recovery in sales of Playstation3 and Playstation Portable, which have faced tough competition from rival Nintendo's Wii and DS consoles.
Its entertainment business was on positive turf, as sales at Sony Pictures Entertainment rose 3.4 percent thanks to the box-office hit "Hancock" featuring Will Smith.
Sony's financial business, ranging from insurance to banking, incurred a loss of 25.3 billion yen, reversing a profit of 23.1 billion yen a year earlier due to a plunge in Japanese share prices.
Sony last week cut its forecast to a net profit of 150 billion yen for the full financial year to March, down 59 percent from the previous year. Revenue is expected to edge up 1.5 percent to 9.0 trillion yen.
Chairman Howard Stringer said this week that the electronics giant was keeping up its long-term global ambitions despite taking a "very, very strong" hit in the global financial crisis.
Troubles at the company's joint venture Sony Ericsson have added to the woes. The Swedish-Japan mobile telephone maker plunged deep into the red in the quarter with a net loss of 18 million euros (22.8 million dollars).
The price of Sony shares, seen as a bellwether of corporate Japan, gained 1.95 percent to 2,035 yen as Japan's benchmark Nikkei stock index soared 7.74 percent by the close on Wednesday.
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