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Sony's third-quarter earnings rose 55 per cent, but more on the back of content than the kit used to play it back.

Sales for the three months to 31 December 2004 totalled ¥2.15tr ($20.9bn), down 7.5 per cent on the year-ago quarter's total, ¥2.32tr ($22.5bn).

Net income came to ¥143.8bn ($1.4bn), up 55.3 per cent from ¥92.6bn ($898.9m) a year ago, thanks to a tax credit. However, operating profit fell 13 per cent over the same period to ¥138.2bn ($1.34bn).

The reason, the electronics and media giant said, was declining demand for PlayStations, CRT TVs, camcorders and portable audio systems. Falling component prices hit the company's figures too. Despite a strong brand, Sony's electronics sales have been hit by competition from cheaper Asia-sourced product. It also failed to tap into emerging demand for large-format LCD and plasma TVs as well as its Japanese and South Korean rivals. Ditto the way it ceded dominance of the portable music market to Apple's iPod.

"We take pride in the fact that the portable audio market is a market that Sony created so we must rebuild our presence in this market," CFO Katsumi Ihara said.

Q3 electronics sales were down 0.9 per cent year on year but income plunged 23 per cent to ¥49bn ($475.7m) from ¥64.4bn ($625.1m)

Falling demand and price reductions helped cut Sony Computer Entertainment's operating income to ¥44.6bn ($432.9m) down 37 per cent on the year-ago quarter's ¥70.5bn ($684.3m).

However, Sony's media interests, in particular Sony Pictures Entertainment (SPE), boosted the bottom line. Spiderman 2 DVD sales were particularly strong, the company said.

SPE's Q3 operating profit more than tripled to ¥18.6bn ($180.6m) from ¥5.6bn ($54.4m) the previous year. Sales jumped 12 per cent over the same period. Music operating income fell 26 per cent to ¥12bn ($116.5m) from ¥16bn ($155.3m), in part due to August's merger of Sony Music Entertainment and Bertelsmann Music Group into Sony BMG.

Improved results from its mobile phone JV, Sony Ericsson, helped too.

The company pledged to revivify key consumer electronics lines the better to compete with its rivals.

"We are resolutely working to ensure a revitalisation in the profitability of the Sony Group," said Chief Executive Nobuyuki Idei.

Sony maintained its full-year profits forecast: ¥150bn ($1.46bn), up from ¥88.5bn ($859.1m) last year. ®

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