Sony Corporation has announced a revision of its consolidated results forecast for the fiscal year ending March 31, 2007 from that announced on July 27, 2006.
The revised forecast is primarily a result of the following factors:
-Sony plans to record a provision of approximately $5814 million within the Electronics segment during the second quarter of the fiscal year ending March 31, 2007. This relates to charges expected to be incurred as a result of the recall by Dell Inc., Apple Computer Inc. and Lenovo Inc. of notebook computer battery packs that use lithium-ion battery cells manufactured by Sony and the subsequent global replacement program initiated by Sony for certain notebook computer battery packs used by Sony and other notebook computer manufacturers that use lithium-ion battery cells manufactured by Sony.
-A decrease in sales and an increase in operating loss are expected within the Game segment as a result of the reduction of the retail price of PLAYSTATION 3 (PS3) hardware in Japan and the fact that sales and profitability from the PSP (PlayStation Portable) business are expected to be lower than originally forecast.
-Decreased operating income is anticipated within the Electronics segment due to a production adjustment of devices for use in PS3 including semiconductors.
-During the second quarter of the fiscal year ending March 31, 2007, foreign exchange rates trended favorably compared to our previous forecast as a result of the depreciation of the yen. We have also changed our assumption for foreign currency rates, as noted above, to reflect a depreciation of the yen during the second half of the fiscal year below the rates assumed in the July 27, 2006 forecast.
-Restructuring charges, recorded as operating expenses, are now forecasted to be $4560 million, compared to an anticipated $5700 million of restructuring charges included in the July forecast. Due to the successful redeployment of personnel to growth business areas, early retirement expenses are expected to be lower than originally anticipated.
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, including digital cameras, which are both driving factors behind future business growth, and operating results for our overall Electronics business continue to recover favorably. With regard to PS3, although we expect to record a loss for the business during its initial launch phase within the current fiscal year, we look forward to the successful worldwide deployment and expansion of the platform, beginning with the Japanese and North American launch in November 2006, followed by the European launch in March 2007. As a result, we expect that we can realize a significant improvement in profitability during the fiscal year ending March 31, 2008.
Consolidated Results for the Second Quarter of the Fiscal Year ending March 31, 2007
Consolidated results for the quarter ended September 30, 2006 are projected to include sales and operating revenue of approximately Y1,850 billion, an operating loss of approximately $2394 million, a loss before income taxes of approximately $2964 million, equity in net income of affiliated companies of approximately $2280 million and net income of approximately $228 million. Restructuring charges of approximately $570 million are included in operating expenses. The preceding operating loss and loss before income taxes numbers include the recording of a provision of approximately $5814 million relating to charges resulting from the notebook computer battery recall and global replacement program discussed in note 1 above. The impact to net income as a result of this provision is approximately $3420 million. However, please note that the above totals are subject to confirmation and that Sony's consolidated operating results for the second quarter are scheduled to be announced on October 26, 2006.
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