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Recalling 9.6 million batteries could have that effect on a company's bottom line

Those who have been following the news know that Sony has seen better days. Sony revealed to investors that net income for the year will decline 35 percent to 80 billion yen (US$675 million) from a year earlier, great short of the July forecast of 130 billion yen. Operating profit will fall 62 percent to 50 billion yen (US$420.6 million) this fiscal year, while the sales forecast was kept at 8.23 trillion yen (US$69.2 billion).

Reasons cited for the dive in profits are fairly obvious. Sony CFO Nobuyuki Oneda said in this mini report that a total of 9.6 million Sony-made PC batteries which were found in Dell, Lenovo, Apple, Toshiba, Matsushita/Panasonic, Fujitsu, Sharp and Sony's own notebooks could be subject to the company's global recall. Oneda said replacing the cells will cost 51 billion yen (US$429 million).

"The cost of the recall is our best estimate," Nobuyuki Oneda told reporters. "It may rise or fall."

Other reasons behind Sony's big financial revisions came from PlayStation 3. Sony announced at the Tokyo Game Show that the 20GB variant of the PlayStation 3 would receive a 20 percent price cut even before it hit stores and that it would include an HDMI connection that was previously reserved for the more expensive 60GB version. While this was good news for consumers, to investors it meant a more costly machine to produce. PlayStation 3 sales projections were also cutback due to the delay of the European launch.

Read more about it in this Reuters article.

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RE: Of course they leave out...
By dwalton on 10/23/2006 6:29:27 PM , Rating: 2
"And if you had read my post you would have seen that I said "In fact the only thing that kept margins up two years ago was the PS2 game sales."

Look at the "Business Overview", it shows annual data for the last three years so it is relevant and its you that need to "read".

Sony's picture and financial division posted profits two years ago with it's financial division posting a bigger profit than it game division (9.3 vs. 8.7 billion yen)

"They also leave out that Sony has been doing poorly EVERYWHERE for the last few years"

The only divison to post an annual operating lost, other than electronics, is Sony's "other" division (music, network , etc.) in 2004. So, define "poorly everywhere" because just looking at Sony's financial data for the last few years it is hard to believe that anyone looking at these numbers would conclude such statement.

If you are not going to post sound facts don't if i were a sony pr person I would be more dramatic and throwing out statements of disillusionment.

"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation

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