Sony Corp has reported a 68 per cent fall in annual operating profit due to losses in its game unit and costs to recall PC batteries, but it forecast steep growth this year that beats market expectations.
The Japanese electronics and entertainment conglomerate was hit hard last year by massive costs to launch the PlayStation 3 (PS3) game console and recall 9.6 million units of its laptop PC batteries, which in rare cases could catch fire from overheating.
But it is taking steps to cut production costs for the PS3 and is starting up an advanced liquid crystal display (LCD) panel plant with Samsung Electronics this year, shoring up its profitability.
Sony, locked in a battle with Microsoft and Nintendo for dominance in the €23 billion video game industry, forecast an operating profit of 440 billion yen (€2.7 billion) for the year to March 2008, exceeding a consensus of 377.8 billion yen in a poll of 20 analysts by Reuters Estimates.
It expects sales to grow 5.8 per cent to 8.78 trillion yen.
Sony, which offers Bravia LCD TVs, Cyber-shot digital cameras and Vaio PCs, has packed its cutting-edge technology such as a Blu-ray high-definition DVD player in the PS3, enabling lifelike graphics but driving up its manufacturing costs.
The basic version of the PS3 is priced twice as high as Nintendo's new console, the Wii, which has been outselling the Sony machine in Japan and the United States since the devices were launched late last year.
Operating profit at Sony came to 71.75 billion yen in the year ended March 31st, down from 226.42 billion yen a year earlier.
Sales rose 10.5 per cent to 8.30 trillion yen while net profit rose 2.2 per cent to 126.33 billion yen, boosted by the strong performance of Sony Ericsson, the world's fourth-largest mobile phone maker owned jointly by Sony and Ericsson
Prior to the announcement, shares in Sony closed up 1.3 per cent at 6,460 yen, outperforming the Tokyo stock market's electrical machinery index IELEC, which rose 0.3 per cent.
Sony shares gained 10 per cent in the previous business year, while the sub-index was up 0.5 per cent.