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The BBC's Charles Scanlon
"The company said economic conditions in its key markets including Europe and Asia were difficult"
 real 28k

Thursday, 26 July, 2001, 09:12 GMT 10:12 UK
Consumer slump triggers Sony loss
Sony's PlayStation 2 games console
Slow games sales have hit Sony hard
Japanese consumer electronics giant Sony has posted a first quarter net loss after flagging consumer spending saw its key games unit fail to match expectations.

A huge recall of Sony phones by Japan's biggest mobile network, NTT DoCoMo, was also responsible for the loss of 30.1bn yen (171m, $244m). Last year's loss was 92.4bn yen after a US accounting charge.

In common with many other electronics companies, Sony saw its stockpile of unsold products mount during the quarter, as the global economic slowdown eats into demand.

Things are likely to get worse before they get better, the company said, "due to such factors as decreases in demand, oversupply and falling prices".

Games problems

Although the company showed a slight operating profit of 3bn yen, that does not take into account the cost of writedowns of inventory and the cost of the phone recall.

Before the figures were released brokers were predicting an operating profit of about 26-37bn yen, on a par with last year's.

Looking forward, the company warned that full year net profits would now probably be 90bn yen, rather than the 150bn yen it predicted in April. Sony shares slid ahead of the announcement.

The main disappointment, analysts said, was the performance of the games unit, which narrowed losses but still failed to make it into the black.

Sony's PlayStation 2 games console was launched late last year to huge acclaim, but the start-up costs and marketing expenses are continuing to eat into the unit's performance.

Worse, analysts said, was the fact that games sales were being hit hard by the consumer slump.

Overall sales grew just 4.6% to 1.64 trillion yen for the quarter.

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See also:

21 Jul 01 | Reviews
Gran Turismo fuels PlayStation 2
04 Jul 01 | Business
Sony recalls 560,000 mobiles
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Sony heads for good year
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Playstation woes hit Sony profits
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