Sony's profit nearly halved by film results, tax, lower sales

MUMBAI: Media and consumer electronics giant Sony has announced its results for the second quarter ended 30 September 2005. Profits dropped 46 per cent to $246 million on $15 billion as a result of lower revenues in the movie business and a heavier tax burden.

Sales of television sets and Walkman music players fell and its Hollywood studio failed to produce any big hits. Sony would have reported a loss were it not for a one-time gain equivalent to $637 million. The gain resulted from the transfer of part of the company's employee pension plan to the government.

Sales were up in Sony's game unit because of healthy demand for the PlayStation Portable, or PSP, handheld machines. However results were not too good in the company's core electronics unit. Rising sales of liquid-crystal display TVs and camcorders failed to offset falling sales of plasma TVs and digital cameras.

Sony has also reiterated its outlook for a loss of nearly $87 million for the fiscal year ending in March. It would be the company's first annual loss in more than a decade.

Media reports indicate that Sony has been slow to take advantage of new trends like portable digital music, where it trails Apple Computer's popular iPod. The company has also struggled to respond to cheaper rivals in lower-wage Asian countries like China that have flooded global markets with television sets, DVD players and other consumer electronics.

One factor that affected Sony's results were higher corporate tax payments, totaling 65 billion yen ($561 million) in additional expenses.

Sony had announced a revival plan last month under its new CEO Howard Stringer, the first foreigner to head the Tokyo-based company. Stringer had come to India last week to celebrate the company's 10th anniversary in the country.

Sony said that it also took special losses for its equity holdings in an LCD panel joint venture with Samsung Electronics Also hurting earnings were losses related to its MGM acquisition as well as those linked to its investment in its music division Sony BMG Music Entertainment, which was formed after Sony's music unit combined with German media company Bertelsmann's BMG label.

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