Sony Warns Profit to Plummet 89%

Electronics and media giant Sony Corp. slashed its sales and profit estimates again Friday amid falling demand for its audio and video products.

Company officials said profit for its fiscal year ending March 31 will plunge 89%, to about $84 million, from the $755 million projected in July. The Tokyo-based company had predicted in April that its annual profit would be $1.3 billion.

Sony plans to withdraw from or diminish its presence in 20 more business categories, adding to the 28 it specified last year. It also plans to reduce fixed costs, trim spending on components and launch a previously announced effort to shrink its work force.

The company will take a $420-million restructuring charge in the current fiscal year. Of that amount, almost $170 million would be set aside for Sony’s voluntary retirement program, which aims to cut the company’s work force by 5,000, or 2.8%, this fiscal year.

The news, which came after the Tokyo stock market closed, sent Sony’s stock reeling on world markets. Sony shares dropped 11%, or $3.99, to $33.20 in New York Stock Exchange trading Friday.

Analysts said Sony’s warning reflects the grim outlook among consumer-electronics executives, who worry that troubled times have dulled the public’s appetite for new TV sets and stereos.

“It’s going to be rough for everybody this year if this malaise continues and if consumers . . . can’t afford to buy big-ticket items, which is what consumer electronics is all about,” said Gary Arlen, an independent consultant.

Nobuyuki Idei, Sony’s chairman and chief executive, said that although the company saw signs of a downturn, “our decision to restructure and our execution came six months too late.”

Sony’s holdings include Sony Pictures Entertainment, a major Hollywood studio, and Sony Music Entertainment Inc., a leading group of record labels. But about 75% of its sales come from electronics gear, including home entertainment, professional video production, video game and computer equipment.

That division, which is the world’s biggest consumer-electronics manufacturer, is likely to see a 90% drop in revenue this fiscal year, analyst Hitoshi Kuriyama of Merrill Lynch wrote in a report Friday. Sales in the critical North American market are expected to drop 10% to 15% from the previous year, with other regions dipping 5% to 10%, Kuriyama wrote.

Although Sony’s profit was falling before the Sept. 11 terrorist attacks, the incidents had an immediate and negative effect.

Sony cut its forecast of total sales to $63 billion, down almost 3% from its July projection of $64.7 billion. It also cut its forecast for the year’s operating profit, or sales minus administrative and marketing costs, to $1 billion, down from $2.1 billion.

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Reuters, Associated Press and Bloomberg News were used in compiling this report.