The company acknowledged more than 1,400 employees were let go and "continuing aggressive restructuring activities are being taken to counteract the effect of the decrease in album sales."

SONY ’02 OPERATING INCOME UP
DESPITE MUSIC’S SOUR NOTES

Operating, Net Income Rises, Thanks to Electronics, Game and Pictures, While Music Loses $72 Million

It’s the same old song.

Sony Corp.’s 2002 fiscal report was anything but music to their ears.

Thanks to increases in its electronics, games and film businesses, the company’s net income was up a whopping 654.5% to $963 million, though less than the company had forecast, while operating income increased almost 40% to $1.55 billion.

Electronics led the way, with operating income of $345 million, while the Games business increased to $939 million and the film business had its highest-ever sales ($6.7 billion) and operating income ($491 million), thanks to smash hits like Spider-Man, Men in Black II, XXX and Mr. Deeds.

The music results were, as expected, not pretty. While sales were off only 1% to $5.3 billion and SMEI sales were up 6%, the overall division recorded a $72 million operating loss as opposed to a $170 million profit last year, a drop of more than $240 million.

The company attributed the results to "a decline in album sales due to the continued contraction of the global music industry brought on by digital piracy combined with competition from other entertainment sectors and economic uncertainty impacting consumer spending." Yo, no kidding.

Sony Corp. went on to attribute the red ink to restructuring charges ($190 million), including the closure of a U.S. manufacturing facility, the consolidation of distribution outside of the U.S. and "various support functions across labels and operating units." The company acknowledged more than 1,400 employees were let go and "continuing aggressive restructuring activities are being taken to counteract the effect of the decrease in album sales."

Among the factors in partially offsetting decline? A decrease in advertising and promotion expenses and higher income generated by the increased DVD software manufacturing activity. Now, doesn’t that make you all feel a little better?

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