Sony Corp. has posted a decline in annual net profit, deviating from earnings growth seen at other Japanese electronics makers, but it joined its competitors in delivering an upbeat outlook for this year.
Strong demand for digital appliances, ranging from flat-panel televisions to digital cameras, powered profit gains at Sharp Corp, Pioneer Corp., and Sanyo Electric Co Ltd. in the business year that ended on March 31, 2004.
Sharp forecast another year of record profit, while Sony said it expected net profit to rise 13 percent to 100 billion yen (U.S. $920 million), in line with market estimates, on the back of digital camera demand and high hopes for blockbuster film "Spiderman 2".
"Sony still needs to convince us with a recovery of sales in its key products," said Fujio Ando, senior managing director at Chibagin Asset Management.
Digital electronics demand has been credited as one of the catalysts for Japan's export-led economic recovery.
Televisions and other electronics accounted for nearly a quarter of Japan's 54 trillion yen ($489.6 billion) worth of exports in 2003.
On expectations of profit gains, investors have piled into Japanese electronics shares. Tokyo's electric machinery sub-index is up 60 percent from 2003.
For the past business year, Sony said profits fell 23 percent after it booked a charge to fund job cuts aimed at improving profitability at its mainstay electronics division, which is playing catch-up with more nimble rivals in the lucrative flat-screen TV and DVD recorder markets.
"We see digital cameras, flat-panel TVs and other digital goods remaining strong and boosting revenues, but there are potential risks in foreign exchange, price competition and higher material costs," Sony CFO Takao Yuhara said at a news conference.
Sony's game division suffered a 40 percent profit slide in 2003-04, due to falling sales of PlayStation 2 game consoles.
Sony said it expected the game unit's profits to fall further this year as PS2 demand continue to wane and it pays for development costs for its new hand-held game machine, PSP.
The machine, due out before year-end in Japan, will have shipments of 3 million units in 2004-05, Sony said. (Reuters)
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