Defective batteries corrode Sony’s profits

16 May 2007

Sony has announced a drop in income of 68.3pc compared to last year, its biggest loss in four years.

Sony stated the main reason for the fall in profits was the result of US$434m spent on recalling lithium ion batteries, which the company had supplied to Dell, Apple, and Lenovo.

Gaming profits were hit hard also due to the launch of the PlayStation 3 console in Europe, Asia and the US, with a certain amount of consoles selling for less than production cost during the introductory period.

The overall cost of introducing the PS3 to the market included the knock-on effect it had on sales of PS2 and PSP consoles, due to falling customer demand in anticipation of the new console.

This also affected gaming software sales. However, actual gaming sales increased by 6.1pc over last year.

Much of Sony’s revenue from this fiscal year can be traced to the large increase of 32.2pc in television sales, mostly from their Bravia LCD screens.

Sony’s Vaio computers and popular Cybershot digital cameras also contributed to overall sales, which went up by 10.5pc

Sony Pictures Entertainment saw an increase of 29.5pc in light of major cinema releases over the last year including Casino Royale and The Da Vinci Code.

Spiderman 3‘s record-breaking box office sales, since its release last month, will not be taken into account, as Sony’s fiscal year ended on 31 March.

By Marie Boran