Sony profit down 90 percent on yen, digicam slowdown

Business Materials 29 October 2008 12:23 (UTC +04:00)

Japan's Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) posted a 90 percent fall in quarterly profit as growing worries about the global economy sent the yen higher and hit camera sales, and the company kept its annual profit outlook of a 58 percent decline, reported Reuters.

The steep profit slide was expected after the electronics and entertainment conglomerate last week cut its annual operating profit forecast by 57 percent, citing yen strength and slower digital camera and flat TV demand.

Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz) this week followed Sony in cutting its full-year outlook, although Panasonic Corp (6752.T: Quote, Profile, Research, Stock Buzz) on Tuesday bucked the trend and kept its annual outlook of 8 percent profit growth despite the tough business environment.

Sony, which competes with Canon in digital cameras and with Samsung Electronics Co (005930.KS: Quote, Profile, Research, Stock Buzz) in LCD TVs, reaffirmed an operating profit forecast it issued last Thursday of 200 billion yen ($2.02 billion) for the year to March, down from 475.3 billion yen a year earlier.

Some industry watchers, however, expect the maker of Bravia flat TVs and Cyber-shot digital cameras to post an even lower profit for the current business year as the latest outlook is based on what they consider rather optimistic assumptions.

Analysts polled by Reuters Estimates on average predict an annual operating profit of 158.2 billion yen.

Sony's latest outlook is based on a euro/yen exchange rate assumption of 140 yen for the second half of the year to March and on the premise that Tokyo stock levels remain unchanged from September 30 for the last six months of the business year.

The euro traded around 123 yen on Wednesday, while the Nikkei .N225 has lost about a quarter of its value so far this month.

Operating profit totaled 11.05 billion yen in July-September, down from 111.62 billion yen a year earlier.

Net profit fell 72 percent to 20.8 billion yen on sales of 2.07 trillion yen, down 0.5 percent.

Prior to the announcement, shares in Sony closed up 2 percent at 2,035 yen, underperforming the Tokyo stock market's electrical machinery index , which rose 6.7 percent.

Sony shares have lost 68 percent since the start of the year through Tuesday, while the subindex slid 56 percent.