Sony’s Profit Down 23% for Fiscal Year

Sony Corp. on Tuesday reported a 23% drop in net income for its fiscal year ended March 31 as falling prices and restructuring costs weighed on the results.

Revenue grew only 0.3% for the Tokyo-based electronics and entertainment giant as gains by the company’s financial services unit offset declines in its electronics, games, music and movie divisions. Altogether, Sony reported sales of nearly 7.5 trillion yen, or about $66.87 billion based on the average exchange rate over the course of the year.

Net income for the year was 88.5 billion yen, or $789 million, off sharply from net income of 115.5 billion yen, or $1.03 billion, the previous year. The results include nearly $1.5 billion of restructuring costs, most of which came from the electronics businesses.

Sony Chairman Nobuyuki Idei said the company’s restructuring efforts were focused on reducing fixed costs and that he planned to spend nearly as much on restructuring in the current fiscal year. In addition, he said, the company will work to “promote greater efficiencies in product development and design.”

But those words did little to reassure Lehman Bros. analyst Yuki Sugi that Sony’s efforts will produce short-term improvements. She said the company wasn’t likely to reap the benefits of its restructuring until its next fiscal year. “They are behind in their realignment compared to other companies like Panasonic,” Sugi said.

Still, the results didn’t produce the shock experienced a year ago, when Sony revealed a meager profit only months after it forecast a $1.5-billion gain. After that surprise earnings announcement, the company’s stock slipped 15% in one day.

This year’s results were released before the opening bell at the New York Stock Exchange, where Sony’s U.S. shares fell $1.14 on Tuesday to $41.55.

In Sony’s flagship electronics business, which accounts for nearly two-thirds of the company’s sales, growing demand for cellphones, digital cameras and flat-panel televisions failed to make up for waning interest in traditional TVs and portable audio devices.

The game division, which contributed 10% of total revenue, saw double-digit declines in both sales and profit. The company boosted spending on research and development to build a new version of its popular PlayStation game console -- due out at the end of 2005 at the earliest -- while sales of existing consoles declined.

Sony’s music business swung to an operating profit from a year-earlier loss as the company streamlined its manufacturing and distribution processes and cut advertising and promotional expenses. The pictures division benefited from television syndication deals but posted an overall operating loss because of box-office bombs such as “Gigli.”

Only Sony’s financial services group posted gains in both sales and operating income, mostly because of the performance of the company’s life insurance unit.

For the fourth quarter, Sony recorded sales of 1.8 trillion yen, or $16.7 billion, a 7.1% increase over a year earlier. The company reported a net loss of 38.2 billion yen, or $359 million, a 66% improvement over last year’s fourth quarter.