3RD LD: Sony's net profit plunges 60% in 1st half of FY 2008.
(EDS: ADDING INFO IN 10TH, 14TH AND 17TH GRAFS)
Sony Corp. said Wednesday its group net profit for the first half of the current business year ending March 2009 plunged 60.2 percent from a year earlier to 55.79 billion yen, hit by a stronger yen and an intensifying price war amid the global economic downturn.
Sony also cited recent plunges on the Tokyo stock market as eroding the value of its stocks and other securities investments.
For the April to September period, Sony said its operating profit slumped 63.7 percent to 84.49 billion yen on sales of 4.05 trillion yen, down 0.2 percent.
It is the first time in three years that the electronics and entertainment giant has reported declines in both sales and profits for the first half of a business year.
The announcement came after Sony last week drastically lowered its earnings forecast for the whole of the current business year, citing unfavorable foreign exchange rates and slowing demand for consumer appliances.
Sony Chief Financial Officer Nobuyuki Oneda said at a press conference that competition to slash prices is a major reason behind the company's decision to give up on its plan to turn around its loss-making TV business this fiscal year.
''Stocks plunged in the United States and Europe, and we had to cut prices by a certain level to cope with (slowing demand),'' Oneda said.
He added that the yen's steep rise against the dollar and the euro also sharply undermined the company's profitability.
Sony, which rakes in about 80 percent of its sales overseas, is vulnerable to foreign exchange rate fluctuations as every 1 yen of appreciation against the dollar and the euro trims the company's annual operating profit by 4 billion yen and 7.5 billion yen, respectively.
Reflecting such adverse factors, its operating profit in the electronics segment dropped 48 percent year on year to 120 billion yen in the first half of the current business year.
In the financial segment, Sony said its operating profit tumbled 90.7 percent to 5.3 billion yen as its insurance unit Sony Life Insurance Co. saw huge investment losses linked to the global financial turmoil.
In contrast, Sony said its operating loss in the gaming business narrowed to 34 billion yen from 125.9 billion yen a year earlier due to increased sales of PlayStation 3 and PSP game consoles as well as related software titles.
The operating profit of its movie business dropped 67.2 percent to 2.7 billion yen, due partly to growing advertising costs.
Its 50-percent owned equity method affiliates as of Sept. 30, Sony Ericsson Mobile Communications AB. and Sony BMG Music Entertainment both fell into the red in the first half of fiscal 2008.
Mobile phone unit Sony Ericsson incurred a pretax loss of 5 million euros, compared with a profit of 711 million euros a year earlier, amid a shift in consumer preferences toward cheaper handsets, especially in Europe.
Sony's music arm Sony BMG logged a pretax loss of $87 million, compared with a profit of $39 million in the previous year, dragged down by the shrinking CD market.
Sony completed its acquisition of Bertelsmann AG's 50 percent stake in Sony BMG on Oct. 1, making the music unit a wholly owned subsidiary.
In its new earnings forecast for the whole of the current business year, Sony is projecting that its group net profit will slump 59.4 percent from a year earlier to 150 billion yen and operating profit will drop 57.9 percent to 200 billion yen, on sales of 9 trillion yen, up 1.4 percent.