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from the L.A. Times

Sony sales slide 20% as global economy erodes profit

Michael Jackson Sony saw sales drop nearly across the board in its fiscal second quarter as the consumer electronics and media giant continued to struggle with a withering global economy.

As shoppers around the world cut back on buying televisions, cameras and computers, Sony's revenue plunged 19.8% to $18.5 billion from the same quarter a year ago. Bargain pricing also eroded profit margins, leading Sony to swing from a $200-million profit last year to a $292-million loss.

Sales slipped in all of Sony's divisions except for its financial services business in Japan. Sony's consumer products and devices division, which includes its Bravia TV and Cybershot camera businesses, plunged 36.5% to $8.9 billion as consumers bought fewer electronics and at lower prices. Still, the unit eked out a $99-million operating profit.

Its networked products division, which includes Sony's PlayStation video game and Vaio computer businesses, also saw a steep 24% drop in sales to $3.9 billion. Losses for the unit widened substantially to $654 million, accounting for the bulk of Sony's operating loss in the quarter.

Sales of its PlayStation 3 game console jumped 33% to 3.2 million units, thanks to a $100 price cut that brought the price down to as low as $299. But that was not enough to make up for a 24% slide in sales of the PlayStation 2 and a 6% decline in sales of its handheld PSP console.

Consumers appeared to also have cut back on other types of entertainment. Sales for Sony's music labels, the second largest in the world after Universal Music Group, fell 3%. But the decline was cushioned by a surge in the popularity of Sony's catalog recordings of Michael Jackson, leading the unit to post a $96-million operating profit on $1.4 billion in revenue.

Sony's movie business also took a hit. Sales declined 30% to $1.5 billion as consumers bought fewer DVDs and curtailed trips to the movie theater. Sony Pictures posted a $71-million loss for the quarter.

On a brighter note, the company said it now anticipated lower losses than it had initially projected for its current fiscal year ending March 2010. Sony credits the improved outlook to the ability for its consumer products business to turn a profit, thanks in part to aggressive cost-cutting, and the health of its Japanese financial services business. File under: It's not as bad as we thought.

-- Alex Pham

Follow my random thoughts on games, gear and technology on Twitter @AlexPham.

 
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