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Last Updated: Thursday, 20 January, 2005, 11:17 GMT
Lower prices to hit Sony profits
Sony plasma television
With more firms offering similar products, prices have dropped
Electronics giant Sony has cut its operating profit and sales targets for the current business year.

Profit for the 12 months to 31 March will be 110bn yen ($1.1bn; 570m), down from a previous forecast of 160bn yen.

Sales will be 3% lower at 7.15 trillion yen. The firm blamed lower prices of goods such as TVs and video cameras.

Competition in the industry has increased, while global consumer demand is sluggish, forcing many retailers to slash prices to attract customers.

Fast forward?

Sony also pointed to disappointing sales at its portable music division, which produces goods such as MP3 players to compete with market leader Apple's iPod.

There will of course be some negative reaction in Sony's stock and for the whole electronics sector
Koichiro Suzuki of Sompo Japan.

Earnings will be further hit by 100bn yen of restructuring costs.

Analysts said that the company's shares may now be under pressure and may drag other stocks in the sector lower.

"With price competition being the main reason behind the drop (in profit and sales), there will of course be some negative reaction in Sony's stock and for the whole electronics sector," said Koichiro Suzuki of Sompo Japan Asset Management.

On a positive note, Sony lifted its full-year net profit forecast by 36% to 150bn yen, citing smaller-than-expected tax costs in the US.

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