SNE - Negative announcement

Technology
Sony Cuts Profit Forecast
By TSC Staff
10/19/2006 10:01 AM EDT
URL: http://www.thestreet.com/newsanalysis/techhardware/10316132.html

Sony (SNE) slashed its full-year profit forecast by 38%, largely because of charges related to the recall of millions of its laptop-PC batteries.


The Japan-based consumer electronics giant says net income for the fiscal year ending March 31 will likely be around 80 billion yen, or $675 million. Previously, Sony had been forecasting a profit of 130 billion yen, or roughly $1 billion.

Sony left its sales and operating revenue projection for the year unchanged at 8.23 trillion yen.

The company plans to record a provision of about 51 billion yen for charges associated with the recall by Dell (DELL) , Apple (AAPL) and Lenovo of notebook computer battery packs that use lithium-ion battery cells made by Sony.

Further weighing on Sony's results are problems at the company's game segment. The division has been hurt by a reduction of the PlayStation 3 console's retail price in Japan and lower-than-expected sales and profits from the PlayStation Portable.

"Although Sony's consolidated results during the current fiscal year will be negatively impacted principally by the provision relating to the aforementioned battery pack recall and global replacement program, as well as the revision to the PS3 launch schedule, we have continued to produce hit products in our LCD TV and digital imaging product categories," the company said.

For the second quarter, Sony expects revenue of about 1.85 trillion yen, an operating loss of around 21 billion yen, and net income of approximately 2 billion yen.

Shares of Sony dropped 3.1% to $39.03 in U.S. trading Thursday.