Tokyo - Japan's Sony said on Wednesday its operating profit plunged 90% in the second quarter of the financial year, hit by a surging yen, a weak global economy and intense price competition.
Operating profit dropped to ¥11.0bn in the three months through September, down from ¥111.6bn in the same period of the previous year, a company statement said.
The electronics and video-game giant, which last week slashed its full-year forecasts, was pessimistic about the upcoming holiday shopping season.
"The expectations being factored in are that Christmas sales will be considerably negative," Sony's chief financial officer, Nobuyuki Oneda, told a news conference.
"But we cannot predict what sales will be like after Christmas."
In the second quarter, net profit plunged 72% to ¥20.8bn as revenue dropped 0.5% to ¥2.07 trillion.
The figures were in line with preliminary results given by the group last week in its forecast revision.
The steep fall was partly due to a slump in the Japanese stock market, which hit Sony's financial services business. The year-earlier figure was also inflated by the sale of a portion of the site of Sony's former headquarters.
Unavoidable
Sony said it has cut its sales target for liquid crystal display televisions to 16 million units this financial year from a previous 17 million due to tough competition.
"The decline in prices (of televisions) is now steeper particularly in the United States and Europe," Oneda said.
"Considering foreign exchange and other issues, we cannot avoid suffering a considerable loss," he said, adding it would be hard to return to the black in the television business over the next few years.
The yen soared this month to a 13-year high against the dollar due to the global market crisis, causing headaches for Japanese exporters whose products become less competitive overseas.
But in the video game sector, losses more than halved to ¥39.5bn thanks to a recovery in sales of Playstation3 and Playstation Portable, which have faced tough competition from rival Nintendo's Wii and DS consoles.
Its entertainment business was on positive turf, as sales at Sony Pictures Entertainment rose 3.4% thanks to the box-office hit "Hancock" featuring Will Smith.
Sony's financial business, ranging from insurance to banking, incurred a loss of ¥25.3bn, reversing a profit of ¥23.1bn a year earlier due to a plunge in Japanese share prices.
Sony last week cut its forecast to a net profit of ¥150bn for the full financial year to March, down 59% from the previous year. Revenue is expected to edge up 1.5% to ¥9.0 trillion.
Chairperson Howard Stringer said this week that the electronics giant was keeping up its long-term global ambitions despite taking a "very, very strong" hit in the global financial crisis.
Troubles at the company's joint venture Sony Ericsson have added to the woes. The Swedish-Japan mobile telephone maker plunged deep into the red in the quarter with a net loss of €18m.
The price of Sony shares, seen as a bellwether of corporate Japan, gained 1.95% to ¥2 035 as Japan's benchmark Nikkei stock index soared 7.74% by the close on Wednesday.
- Sapa