Sony's games unit sends profit down 25%

Movie studio also posts quarterly loss as company battles to stay competitive


TOKYO - Sony Corp.'s troubles continued last quarter, as its net profit fell 25 percent from the period a year earlier, the company said yesterday. Income from its games division plunged and its movie studio posted a loss.

Sony, the world's second-largest electronics maker, also trimmed by 23 percent its full-year target for operating income, a measure that excludes taxes and one-time events, and reflects the core business. The company, which is trying to overhaul its electronics division, left its net profit target unchanged.

The quarterly results fell short of market expectations and provided more evidence that Japan's premier brand is having trouble keeping its vast entertainment and electronics empire competitive. While Sony has been cutting expenses to meet rivals such as Dell, Matsushita Electric and other electronics giants, it has been relying on profits in the game and movie operations to buoy earnings.

But in the quarter that ended Sept. 30, the movie division was unable to reproduce last year's record run at the box office. Demand for PlayStation 2 game consoles slipped, while sales of electronics in Sony's most profitable market, the United States, fell 8 percent.

Sony, at least for now, appears to have weathered another more immediate worry, the yen's strength against the dollar, because of improving demand for its cell phones, laptop computers and digital cameras in Japan and Europe. A weaker dollar typically erodes profits when they are converted into yen, but Sony offset those losses with gains against other currencies.

The tepid numbers were reported days before Sony's annual strategy session, the results of which will be released Tuesday.

Several reports have surfaced suggesting that Sony will announce plans to cut as much as 10 percent of its work force and phase out some production of slow-selling electronics such as its cathode-ray-tube televisions. Sony is also likely to announce a partnership to produce liquid crystal display panels with Samsung Electronics in South Korea.

Sony said it earned 32.9 billion yen ($302 million) in the period that just ended, its second fiscal quarter, 25.3 percent less than in the quarter a year ago. Operating profit fell 34.3 percent, to 33.2 billion yen. Sales grew 0.4 percent, $16.5 billion.

For the year that will end in March, Sony expects to earn 50 billion yen, which would be 57 percent less than it earned in the previous year. The company expects to earn 100 billion yen in operating profit, 23 percent less than it forecast in July.

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