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Sony profits down but still beat expectations

Strong yen, ailing PlayStation profits hit hard

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Sony saw its profits fall more than ten per cent during its most recent fiscal quarter though the results weren't as bad as the company and analysts had anticipated. The Japanese giant posted a consolidated operating profit of Y164.2 billion ($1.55 billion), down 10.2 per cent on last year's figure, rather less than the 20 per cent fall analysts had predicted. Sony blamed dwindling revenues from its PlayStation business, which has seen some very heavy price-cutting in the wake of rival Sega's Dreamcast launch last autumn, and the strength of the yen against the dollar, which has hit the value of Sony's overseas sales hard. Two-thirds of the company's revenues come from outside Japan. During the quarter the yen rose 15 per cent on the dollar. PlayStation-derived profits fell 26.7 per cent to Y57.54 billion ($543 million), while profits from Sony's music and movies subsidiaries were down by 26.7 per cent and 23 per cent, respectively. Balancing those declines was an increase of 25.2 per cent in profits from Sony's various consumer electronics operations, in particular DVD systems, digital camcorders and the company's popular Vaio PC range. Electronics sales are expected to be strong throughout the current quarter, which should also be boosted by the March launch of the PlayStation 2. Conversely, that should also see revenue from the original PlayStation tail off even faster, though it could also drive sales in Europe and the US, which won't receive the new console until the autumn. Once PlayStation 2's capabilities are shown to the public -- one of which is backwards compatibility with the PlayStation 1 -- new customers may well choose to buy into PlayStation 1 in the knowledge they can upgrade painlessly later. Sony hopes to sell one million PlayStation 2s during March and six million more throughout the following financial year. Countering the revenue derived from those sales will be Sony's massive advertising campaign. ® Related Stories Sony to launch e-commerce biz to serve PlayStation 2 users Sony to become 'Web department store' says president

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