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Sony Is Guarded on Profit

The company's president says earnings from home electronics will be little changed.

September 17, 2004|From Times Wire Services

Sony Corp. on Thursday said profit from home electronic products in the third quarter, including the holiday shopping season, would be little changed because it's not making as much money on television sales.

"Our home products business is not in a situation where profit will grow by much from the year-ago period," Sony President Kunitake Ando told reporters at a convention in Tokyo, where the company is based.

Profitability will also depend on how much Sony spends on restructuring, he said.

Sony, the world's second-largest consumer electronics maker, is selling more flat-panel televisions that generate lower profit margins than traditional cathode-ray tube televisions, Ando said. Research and development costs are higher for the flat-panel equipment, and that will hurt profit.

Demand for stereos and other audio products is shrinking, Ando said. Unlike most of its Japanese rivals, which introduced new models ahead of the Summer Olympics, Sony will begin selling new products this month.

Electronics account for 70% of Sony's revenue. The company earns most of its profit in its fiscal third quarter, which ends Dec. 31 and includes the crucial year-end shopping season.

Sony's operating profit -- sales minus the cost of goods sold and administrative expenses -- fell by almost half to $63 million in the quarter ended June 30, because of higher restructuring fees and development costs for digital products.

Sony shares fell 9 cents to $35.14 on the New York Stock Exchange.

Bloomberg News and Dow Jones/Associated Press were used in compiling this report.

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