Stumbling, Sony Lowers Sales Forecast Amid Slump
Sony Corp. on Thursday lowered its revenue forecast, citing continued sluggish sales of the televisions, portable music players and video cameras that made it a consumer electronics powerhouse.
The Tokyo-based electronics and entertainment giant said revenue for its fiscal year ending March 31 would be $69.2 billion, down 5% from $73 billion the previous year and off 3% from its forecast in October of $71.1 billion.
Sony shares fell $1.69, or 4%, to $37.11 on the New York Stock Exchange. It was their steepest one-day drop since October 2003.
Virtually all of the drop in revenue stems from weak sales of Sony’s signature consumer electronics products. The company also cited slack demand for its semiconductors.
Executives said sales and profits in other businesses -- including movies, music and games -- remained on target.
Notably, though, the company that invented the Walkman has stumbled in the fast-growing market for portable digital music players.
Sony originally insisted on selling devices that would play only its proprietary format while aggressive newcomers such as Apple Computer Inc., Samsung Electronics Co. and Creative Labs Inc. grabbed market share.
Last year the company changed its stance, selling players in Europe that supported the popular MP3 song format.
The company is expected to do the same in the United States this year, offering an expanded line of devices that have either hard disk drives or solid state memory chips.
“We have to concentrate on our original nature: challenging and creating,†said Ken Kutaragi, president of Sony Computer Entertainment Inc.
But some analysts think that Sony hasn’t moved quickly enough to correct its missteps.
Although the company “has awoken to the fact that it has competition from Apple in the portable audio market ... we believe that Sony has been slow to respond to the iPod and iTunes challenges,†said P.J. McNealy, an analyst at American Technology Research in San Francisco.
Meanwhile, increased competition from South Korean and Chinese manufacturers have driven prices down and hurt sales of other Sony’s products.
“Product prices have dropped more sharply than we anticipated, and we have been unable to make up for that with cost cuts,†said Katsumi Ihara, Sony’s executive deputy president.
Analysts said the competition was particularly stiff in the market for high-end plasma and high-definition televisions, DVD recorders and video cameras.
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Times staff writer Jon Healey contributed to this report, and Associated Press, Bloomberg News and Reuters were used in compiling it.
