Sony Corporation announced a 68pc rise in annual operating profit today resulting from investment gains and strong sales of flat TVs but forecast a sharp fall in profit this year due to start-up costs for PlayStation 3 (PS3).
Sony has enjoyed gains on investments at its life insurance unit due to a resurgent Japanese stock market, strong demand for its recently launched Bravia brand LCD TVs and a softer yen.
The entertainment giant also reported healthy sales of its PlayStation Portable handheld game console and Vaio PCs, helping offset revenue loss arising from waning demand for traditional TVs along with heavy restructuring costs.
Sony predicts its game division will experience an operating loss of €700.59m this business year, however, as it prepares to launch the PS3 in November.
“We believe that we can lower costs dramatically (on the PS3) through chip shrinkage and by cutting the number of parts but there is no way to avoid high costs in the first year,” Sony senior vice-president Takao Yuhara said.
The unpromising forecast comes despite a sharp drop in restructuring expenses which were front-loaded in 2005/06 — the first year of a revival plan under which the company set out to close several factories, sell assets and cut 10,000 jobs.
Sony has staged a comeback in flat-screen TVs, however, raising its global LCD TV market share to nearly 15pc in the fourth quarter of 2005 from under 9pc in the third, indicating the corporation may be on a recovery path after falling behind Sharp Corporation and Apple Computers in LCD TVs and portable music players respectively.
By Niall Byrne
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