Sony warns of tough times ahead

Sony's sales have fallen as the economic slowdown has spread

The Japanese electronics giant Sony suffered a sharp loss during the third quarter of 2001 and warned about a bleak future.

The company has been hit hard by a fall in demand for its hi-tech products amidst a slowdown in economic growth across the world, and there appears to be little relief in sight.

"Current business conditions are far worse than what they were looking at before," said Merrill Lynch analyst Hiroshi Kuriyama..

"Next year will be a difficult time for us," said president and chief operating officer Kunitake Ando ahead of the release.

Sony was hit by a net loss of 13.18bn yen, ($107m, £75m) during July, August and September.

During the same period last year, Sony clocked up 18.7bn yen in profits.

Game's not over

The company's games division was recently given a boost by strong sales of the PlayStation 2 games console.

Sony expects to sell 20 million PlayStations during this year and next.

That will bring some relief for its main source of revenues; its electronics division.

Sony's manufacturing operations of electronic components, displays, disc drives and semiconductors have been weak, and recalls of some of its mobile phones have added to its woes.

Falling profits

Sony shares fell 3.43% to 4,780 yen ahead of the results which were released after Tokyo's stock market had closed.

Late last month, Sony more than halved its profit forecast for the accounting year that ends in March and announced sweeping changes to its structure.

"We are streamlining and boosting efficiency of operations by introducing better supply chain management," Mr Ando said.

But even such a massive revision of its profits forecast failed to bring cheer to the markets as analysts predicted that profits could well fall much further than Sony itself was predicting.