Sony slashes sales and profit forecasts

Written by Writer on Friday, October 24th, 2008

Sony slashes sales and profit forecasts

Sony Corp. drastically lowered profit and sales forecasts for the business year Thursday, blaming deteriorating sales of flat-panel TVs and other gadgets battered by a global slowdown.

The latest numbers would mean Sony’s profit for the business year ending next March is set to plunge 59 percent from the previous year.

Tokyo-based Sony now expects a ¥150 billion profit for the year ending in March 2009, and cited recently unfavorable exchange rates as another big reason for the faltering results.

Back in July, Sony was expecting to post a ¥240 billion profit for the business year.

Sony, which makes the Walkman portable music player and PlayStation 3 game console, had counted on the dollar trading at about ¥105. Now it expects it to trade at ¥100.

Fears have been growing about the earnings of major Japanese companies, which are scheduled to announce their results in the next few weeks. The benchmark Nikkei stock index lost 2.5 percent Thursday due to such worries.

The financial credit crisis that began in the United States is expected to weigh on exporters like Sony, which rakes in more than half its sales in North America and Europe.

Sony also lowered its sales forecast for the business year to ¥9 trillion from the previous ¥9.2 trillion, although that marks a 1 percent improvement from the previous business year.

Sony said in a statement that it expects lower profits in its electronics business because of falling sales of liquid crystal display TVs, digital cameras and video camcorders. Price drops from intense competition also hurt the numbers, Sony said.

The plunge on the Japanese stock market has also eroded the gains Sony is getting from equity and bond investments, the company said. But Sony said results are in line with previous expectations in its gaming and movies division.

Sony said it expects to post a ¥21 billion profit for the July-September period, down 72 percent from ¥73.7 billion for the same period last year. Sales are expected to inch down 1 percent year on year to ¥2.07 trillion, it said.

Sony is to release second quarter earnings next week.