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SONY SOLDIERS ON

Fiscal-Year Results Tell Tale of Tough Times; Music Makes the Best of It
Newsflash: Things are tough all over. Sony Corporation today offered the latest bit of evidence to support that theorem with results for the fiscal year ended March 31.

Overall, the company, which as we know has electronics, video game, movie studio and financial services segments in addition to music, recorded a revenue gain of 3.6% to 7,578 billion yen ($57 billion), aided in part by the depreciation of the yen. Operating income, however, tumbled 40% to 134.6 billion yen ($1 billion), and net income decreased by 8.6% to 15.3 billion yen ($115 billion) compared to fiscal year 2001.

In the context of that obviously less-than-peachy backdrop, however—and the especially tough row the music business has to hoe these days—Sony’s music segment fared reasonably well.

Revenue for the combination of Sony Music Entertainment Inc. (SMEI), which includes worldwide operations outside of Japan, and Sony Music Entertainment (Japan) Inc. (SMEJ) rose 5% to 643 billion yen ($4.8) billion. Operating income for music decreased a relatively modest 1.6% to 20 billion yen ($152 million). SMEI contributed 69% of Sony’s music segment revenue.

In the world outside Japan (and on a U.S. dollar basis), SMEI’s sales decreased 4%, attributed to "the contraction of the global music industry, an increase in digital piracy and the negative impact of the September 11 terrorist attacks in the U.S."

SMEI’s operating income decreased 20% on a dollar basis. The reason? Same as above, in addition to "costs incurred for ongoing restructuring activities, including the reduction in the number of worldwide employees, the rationalization of digital media initiatives and portfolio investments, and the settlement of certain significant industry-wide litigation." Sheesh.

In Japan, revenue increased 2%, while operating income increased 18%, thanks in part to the sale of a studio facility.

Sony expects its music operations to fare better this fiscal year as a result of increased sales flowing from a stronger new release schedule and "an improvement in operating income through further implementation of restructuring initiatives."

Overall, Sony forecasts a revenue increase of 6% for fiscal 2003, and a big 108% increase in operating income. Here’s to the comeback.

Music had it easy this year compared to Sony’s electronics business, which is by far its biggest. Electronics revenue dipped 3%, leading to an 8.2 billion-yen ($62 million) operating loss. Games and pictures, however, posted 52% and 14.5% revenue increases, respectively.

Sony Music is looking to releases from the likes of Lauryn Hill, Korn, Our Lady Peace, Maxwell, Wycleff Jean, Ozzy Osbourne and Will Smith, to name a few, to help shore things up in the first fiscal quarter.

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