Sliding prices for DVD recorders, TVs and other consumer electronics hit Sony Corp's third quarter profit, but it sought to reassure investors that it would press on with a restructuring plan to revive its fortunes. Sony, which vies with Matsushita Electric Industrial Co to be the world's biggest consumer electronics maker, on Thursday posted a 13 percent fall in consolidated operating profit for the three months to December 31.
Weak demand for semiconductors for digital cameras and optical heads used in DVD recorders also hurt performance, as did tough competition in the portable audio market with Apple Computer Inc and its popular iPod music player.
Sony cut its total capital spending forecast for the business year to March 31 by nearly 10 percent to 370 billion yen ($3.59 billion), mostly from its semiconductor business. It also trimmed its chip sales forecast by 2 percent.
Sony has embarked on a restructuring plan dubbed "Transformation 60" (TR 60) designed to slash fixed costs and secure supplies of chips, displays and other key parts needed to differentiate its products and boost profit margins.
Some market players have called for Sony to introduce more drastic measures, but the company offered no new steps.
For the October-December quarter Sony reported a consolidated operating profit of 138.17 billion yen ($1.34 billion), down from 158.8 billion yen in the same period the previous year. Sales tumbled 7.5 percent to 2.15 trillion yen.
The sluggish performance came as no surprise to investors after Sony released preliminary quarterly earnings figures last week, when it slashed its operating profit forecast for the full year to March by 31 percent to 110 billion yen.
Sony's electronics division, which accounts for roughly two-thirds of group revenues, reported a 23.3 percent decline in quarterly operating profit to 49.4 billion yen, citing sliding prices of DVD recorders, televisions and video cameras.
The company's game unit posted a 37 percent decline in operating profit for the quarter to 44.6 billion yen as sales fell 23 percent due to fewer sales of its PlayStation 2 consoles and the effect of a price cut.
Sony said it expected profits in the game division to get a boost from the new PlayStation portable (PSP) game player, which went on sale in Japan in December and is scheduled for launch in the United States and Europe early this year.
The company unveiled plans last week to double production of the PSP, which can also play music and movies, to 2 million units early in 2005 and to 3 million in the peak Christmas shopping season to meet robust demand.
Sony cut its sales target for digital cameras in the current business year to 14 million units from 15 million as it joined rivals such as Olympus Corp that have already scaled back production because of slower than anticipated demand.