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Last Updated: Friday, 17 September, 2004, 05:00 GMT 06:00 UK
Sony warning on Christmas sales
Sony storyboard
Sony has been hit by competition from rivals
Sony has warned that it does not expect profits at its home electronics business to recover in the normally busy Christmas season.

The high costs of developing flat screen television and falling demand will eat into potential profits.

Low profitability in televisions, DVD recorders and audio equipment will be offset by profits from mobile products.

Operating profit in the electronics business fell 46% to 49.5bn yen ($449m; 250m) in the 2003 holiday period.


"We are not in a position where we will see profits in home electronics rise all that much compared with the previous year," said Sony President Kunitake Ando.

A trader in Tokyo
The latest news has prompted a fall in Sony's share price
"It is true that profitability in home electronics is sluggish when compared with mobile products," he added.

The company is facing stiff competition from rivals that have launched new products such as DVD players and televisions.

The electronics division, including home and mobile products, accounts for $45bn (25bn) or two thirds of Sony's overall sales.

Hopes on flat screen

Mr Ando estimates it will need five million liquid crystal displays (LCDs) a year to meet demand for flat screen televisions, a huge increase in projected demand.

Currently, Sony plans to sell one million flat screen televisions during this business year to March.

Earlier this week, Hollywood's last major independent studio, Metro-Goldwyn-Mayer, says it has agreed in principle to be bought by Japan's Sony Corporation.

The deal will give Sony access to MGM's film library, a key source of cash as more movies are released on DVD.

Shares in Sony fell 80 yen or 2.1% to 3,760 yen in Asian trade on this latest news

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