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SONY Q1 PROFIT RISES

Music Sales Increase, Loss Trimmed, While Electronics Division Struggles
Thanks to flat-panel TVs, digital cameras and cell phones (which it makes with Ericsson), Sony reported net profit of ¥23.3 billion ($210 million) for its fiscal first quarter ended June 30, up from ¥1.1 billion ($9.9 million) a year earlier. Group sales, however, increased just 0.5% to ¥1.612 trillion from ¥1.604 trillion.

Sony Music Entertainment (including both U.S. and Japanese divisions) reported that sales rose 1.5% to ¥118.8 billion, ($10.6 billion) despite the difficult economic climate in the music business. SME’s operating loss in the music segment was trimmed to ¥1.1 billion ($9.9 million) from a ¥6 billion ($53.7 million) loss during the same period a year ago.

Sony, of course, is anticipating merging its U.S. recorded-music unit with that of Bertelsmann’s BMG. The two companies received approval to proceed with the deal from the European commission last week. Approval from U.S. regulators is expected shortly.

By comparison, sales in Sony’s game division fell by 16% to ¥105 billion due to drooping demand for its PlayStation 2. Sony shipped 710k PlayStation 2 consoles during the quarter, down from nearly two million a year ago.

Operating income declined nearly 50% in Sony's core electronics business to ¥6.9 billion, thanks in part to ongoing restructuring costs. Sony has earmarked ¥130 billion for continued restructuring for this fiscal year, compared to ¥168 billion last year.

Sales of old-school picture-tube television sets and portable-audio equipment were down sharply, but digital cameras and flat-panel television sets sold well. Sony Ericsson Mobile Communications brought in ¥5.8 billion, up dramatically from the year before.
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