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Wednesday, October 27, 1999 Published at 11:16 GMT 12:16 UK

Business: The Company File

Sony profits tumble

Video games are an important market for Sony

Japanese electronics giant Sony has blamed the strong yen after seeing profits slump nearly 25%.

In the six months to September, Sony saw profit falls on all of its main product lines, with electronics sales down 6.8% and losses in its mobile telephone division.

However, sales of personal computers for home use were up.

Net profit was down 24.5% to 64.9bn yen ($607m).

Overseas sales vital

The strong yen was seen as the main reason for Sony's poor performance.

In the last quarter, the yen has averaged 112.7 to the US dollar - 23.3% stronger that at the same time last year, pushing up export costs and reducing the value of overseas earnings.

Sony sells more than two-thirds of its production overseas, making it particularly vulnerable to a strong yen.

The company estimated that if the yen had not appreciated in the last year, sales would have increased 9% and income risen 25%.

"This rise in the yen had a significant negative impact on the reported financial results translated into yen," Sony said.

The profits slump, however, was not as bad as had been feared earlier this year.

Video games battle

In the three months from April to June, Sony's net profits fell 55%, recovering somewhat in the next quarter.

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.

One of its most important lines is the Playstation games console, the latest version of which has just been released in the UK.

Profits from Sony's game business increased 48% in local currency terms in the US and Europe - but translated into yen, profits fell by 4.2%.

Competition in this lucrative market may be about to become more intense, with reports this week that Microsoft is to launch its own games console in response to the threat to its PC market by the latest internet-capable multi-media machines such as Sony's Playstation 2.

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