Japanese electronics giant Sony said today its profits sagged in the last three months of 2000, hit by production glitches on its flagship PlayStation2 game console and lingering strength in the yen.
The results were slightly better than expectations, but are unlikely to lift a cloud cast over the firm's prospects by a slowing US economy and the doubtful health of a gaming division on which it has staked so much.
Its group operating profit fell 11% to 146.47 billion yen ($1.24 billion) in the crucial October-December period, which provides more than 50% of total profits, compared to expectations of a 15 to 27% fall.
But the firm was forced to halve its full-year net profit forecast to five billion yen, partly on weak sales in its game division, which posted an operating loss of 13.93 billion yen in the quarter, down from a 57.54 billion yen profit a year earlier. Its group net profit declined 23% year-on-year to 72.24 billion yen in the third quarter.
Since the March launch of the latest version of the smash-hit PlayStation, Sony's shares have fallen about 45%, hitting a 16-month low on December 22.
Sony says the PlayStation problems have now been ironed out, although analysts worry initial production delays mean it failed to maximise overseas sales during the crucial Christmas period, leaving it vulnerable to competition from rival consoles. The company lowered its forecast for PlayStation 2 shipments for the current business year to nine million from 10 million units, but said it aimed to more than double that to 20 million units during the next fiscal year to March 2002.
Industry insiders have their doubts about whether the PlayStation 2 can secure a solid foothold in the market after its slow start, which saw Sony slash planned shipments to the key U.S. market in 2000 to 500,000 from one million. Further delays would narrow Sony's window of opportunity ahead of the release this autumn of advanced game machines from Nintendo and Microsoft.
