Thursday, January 31, 2008

Sony Lowers Profitability Target as Stronger Yen Erodes Exports

By Hiroshi Suzuki

Jan. 31 (Bloomberg) -- Sony Corp., the world's second- largest consumer-electronics company, cut its operating profit target as a stronger yen and weaker U.S. demand led to lower earnings at the unit that makes televisions and cameras.

Operating profit will be 410 billion yen ($3.85 billion), or 4.6 percent of revenue, in the year ending in March, Tokyo-based Sony said today in a statement. That's less than the 444.7 billion yen average of 19 analyst estimates compiled by Bloomberg and below the 5 percent margin the company had targeted.

Sony joins Canon Inc. in predicting earnings that missed estimates as the fallout from the subprime mortgage market weakens U.S. consumer spending. The company today also lowered its PlayStation 3 shipment target after its game consoles were outsold by Nintendo Co.'s Wii and Microsoft Corp.'s Xbox 360.

``Global economic conditions are going against the whole consumer electronics industry,'' Yasuhiko Hirakawa, who manages $80 billion of assets at DIAM Co. in Tokyo, said before the earnings announcement.

Third-quarter net income rose 25 percent to 200.2 billion yen in the three months ended Dec. 31, from 159.9 billion yen a year earlier, Sony said. Revenue gained 9.6 percent to 2.86 trillion yen.

The company was projected to report third-quarter net income of 190.4 billion yen, according to the median estimate of six analysts surveyed by Bloomberg. Sales exceeded the 2.75 trillion yen median estimated in the survey.

The company raised its full-year net income forecast by 3 percent to 340 billion yen after the games division turned profitable. The annual sales target was left unchanged.

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