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Wednesday, April 28, 1999 Published at 16:06 GMT 17:06 UK


Business: The Company File

Sagging profits at Sony

The global recession is taking its toll on Sony's sales

Sony's profits have dropped by nearly 20% reflecting the global economic slowdown.

The consumer electronics and media giant shocked analysts around the world when the results were announced on the Tokyo Stock Exchange.

Now the company's fortunes could hinge on the success of its PlayStation 2 games console which is close to being launched.

Sony derives a large chunk of its profits from PlayStation sales.


[ image: Sony's digital camera: More digital appliances are on the way]
Sony's digital camera: More digital appliances are on the way
However, profits in the short-term are under attack - with the company having to pay for restructuring while trying to sell into the depressed Asian, Eastern European and Latin American markets.

Sony has been one of the most successful Japanese consumer electronics companies, pioneering the video recorder, the Walkman, and the mini-disc. The company also owns Hollywood studio Columbia Pictures.

Games success

Sony has had enormous success in the video games market, thanks to the original PlayStation which triumphed over rivals Nintendo and Sega.

Now Sega is fighting back with its Dreamcast machine, and Nintendo is working on a replacement for the N64.

Sony has won wide acclaim from games developers for its initial proposals for PlayStation 2, which will be equipped for Internet access.

Sega said last month that the Dreamcast would appear in the UK in the autumn, priced at £199 and would be able to access the Internet - but only with an optional extra modem, the price of which is not yet known.

Looking to the future

Sony's charge into the digital age and its sweeping restructuring lifted the company's shares last month but analysts said the cost of implementing these will cut earnings into the next millennium.

Sony has recently worked out the technology, in conjunction with IBM, to deliver pirate-proof music recordings over the Internet.

It formed an Internet brokerage firm in Japan in April and was reportedly in talks with US television network NBC, a unit of General Electric, to forge a worldwide partnership.

Sony's research has recently been focusing on a number of hi-tech gadgets for digital audio, Internet access, and computer memory.

Sony posted a consolidated net profit of ¥179bn ($1.5bn) for the year ended on 31 March, a substantial fall from a record ¥222bn ($1.85bn) hit only a year earlier.





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