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Apr 29, 2006, 8:26 PM
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Sony Corp 2005 annual operating report
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Sony posted a 68 percent rise in annual operating profit on investment gains and robust sales of flat TVs, but forecast a sharp fall this year because of start-up costs for PS3.
Sony has enjoyed gains on investments at its life insurance unit due to a rallying Japanese stock market, and robust demand for its LCD Tv's.
The electronics and entertainment conglomerate has also notched up healthy sales of its PSP and Vaio PCs, helping offset tumbling demand for bulky traditional TVs and heavy restructuring costs. But Sony expects its game division to rack up an operating loss of 100 billion yen ($871.6 million) this business year as it gears up to launch the PS3 in November, overshadowing an expected recovery by its core electronics unit.
Sony forecast group operating profit will fall 48 percent to 100 billion yen ($872 million) in 2006/07, well below the market consensus of 171.2 billion yen,. The weak outlook comes despite a sharp drop in restructuring expenses, which were front-loaded in 2005/06 -- the first year of a revival plan under which the company set out to close several factories, sell assets and cut 10,000 jobs.
Sony's operating profit came to 191.3 billion yen in the business year ended in March, up from 113.9 billion yen a year earlier. The result handily beat the market consensus of 130.8 billion yen and Sony's own forecast of 100 billion yen.
Sony said it would aim to return its ailing TV division to a profit in the full year to next March. Previously it had only said it would look to return the unit to the black in the second half of the 2006/07 business year.
Shares of Sony rose 28 percent during the 2005/06 business year,
underperforming Japan's electrical machinery index (.IELEC.T), which
rallied 39 percent. Before the announcement, Sony's shares rose 0.67
percent to 6,030 yen.
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