With the U.S. and European launch of its PlayStation 2 console just hours away, Sony announced Thursday that accounting changes and significantly lower console hardware and software sales helped push it into the red for the first half of its current financial year, the period from April to September.
The Tokyo-based consumer electronics giant reported a group net loss of 68.5 billion [B] yen ($A 1.2 billion) against a net profit of 64.9 billion [B] yen in the same period last year. The company fell into the red after an accounting change associated with advertising cost write-offs for movies in the U.S. Without the effects of the accounting change, the company turned a net profit of 33.2 billion [B] yen but this was still half of the equivalent figure a year ago.
Pre-tax income fell 11.7 per cent to 117.2 billion [B] yen, operating income dropped 16.1 per cent to 94.3 billion [B] yen while net sales and operating revenue rose 4.6 per cent to 3.3 trillion [T] yen.
Sony reported a diluted loss per share of 75.1 yen for the first six months of the year against an earnings per share of 71.4 yen in the year-ago period.
In the game business, which is gearing up for the North American and European launch later today of the PlayStation 2 console, the company reported a "significant decrease" in Sony-brand software sales in Japan and PlayStation hardware in Europe and the U.S.
The drop in hardware sales is expected because many customers are putting off purchases in anticipation of the PlayStation 2's (PS2) imminent launch. However, the drop in software sales in Japan, where the new console was launched in early March, is worrying for the company. Software sales for the PS2 have been lower than expected and while some other software makers have had hit titles, its own software titles have been doing badly, the company said.
During the second quarter, from June to September, shipments of first generation format PlayStation and PSOne machines totalled 2.4 million [M] -- sharply lower than the 6.8 million [M] sold in the same period a year ago. Software sales for the consoles also dropped, down to 40 million [M] units from 48 million [M]. The new PlayStation 2 shipped an additional 980,000 units in the second quarter to take total shipments to 3.52 million [M] units since launch. Software sales in the quarter were 3.4 million [M] units.
In the mainstay electronics business, sales were 10.2 per cent higher thanks to better sales across the board. Sony said the semiconductor and digital equipment sectors did particularly well.
Hot products in Japan included personal computers and semiconductors; Europe saw higher sales of PCs, mobile phones, video camcorders and digital still cameras, and in the U.S. sales of color televisions, PCs, video camcorders and digital still cameras were up. In other regions sales of CD-R/RW drives, semiconductors and optical pickups were strong.
For the full year, Sony said it expects group sales and operating revenue to be 7.2 trillion [T] yen, operating income to be 230 billion [B] yen, pre-tax income to be 255 billion [B] yen and net income to be 10 billion [B] yen -- a drop of 92 per cent on last year's figure.
Sony Corp. Consolidated Income Statement Summary (all figures in billions of yen except where indicated). Source: Sony Corp.
FY2000 H1 FY1999 H1 Change (%)
Net Sales 3,256.9 3,115.0 +4.6
Operating Income 94.3 112.4 -16.1
Pre-tax Income 117.2 132.8 -11.7
Net Income (loss) (68.5) 64.9 n/a
Diluted EPS (loss) 71.4 yen (75.1 yen) n/aSony, in Tokyo, can be contacted online at http://www.sony.co.jp/.