SONY CORP. HAS A YEN FOR
Q3 PROFITS

For the three months ended Dec. 31, 2002, worldwide sales increased to $19.2 billion, with operating income increasing 25.8% to $1.7 billion and net income climbing to $1.05 billion, a whopping 95.9% increase and Sony’s highest quarterly net income ever. The depreciation of the yen against the euro had a positive impact on results.

On the other hand, Sony Music Entertainment, Inc., the U.S.-based corporate entity for the world outside of Japan, recently rocked by the departure of Chairman/CEO Thomas D. Mottola and the subsequent hiring of Andy Lack, sported a sales decrease of 1% and a 10% decrease in operating income. The report cited Dixie Chicks’ Home and Jennifer Lopez’s This is Me…Then as two of the titles that contributed most to U.S. sales.

Of sales generated by Sony’s music holdings, 74% were generated by SMEI—of which Sony Music N.A. is a part—and 26% were generated by SMEJ, the company’s Japanese branch, whose operating income was down 6%.

Combined sales and operating revenue for SMEI and SMEJ during Q3 was $1.7 billion, a decrease of 3.3% over a comparable period the year before. Total operating income for the quarter was $174 million, a decrease of 9.5% over the previous comparable period.

Reasons cited for the decline included a decrease in record sales, higher talent-related expenses, increased costs for ongoing restructuring activities, including worldwide headcount reductions and the cost of a TiVo subscription for Andy Lack.

Partially offsetting this decrease was a reduction in advertising and promotion expenses, increased income generated by the increased DVD software manufacturing activity, as well as savings realized from SMEI’s previously implemented cost savings initiatives.

Sony Corp. Chairman/CEO Nobuyuki Idei pointed to the arrival of Lack to help boost the company’s music business,“which has been impacted by industrywide difficulties…. I look forward to his exercising considerable expertise in improving financial results, which means substituting tuna rolls for the toro sashimi served in the office commissary sushi bar.”