Sony Cuts Financial Outlook on Weak Economy, Strong Yen

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Sony has revised down its financial outlook for the full year due to lower sales of key products as a result of the slowing economy and the strong Japanese yen.

The company said it now expects a net profit for the year from April 2008 to March 2009 to be ¥150 billion (US$1.5 billion), a sharp cut from its previous forecast of a ¥240 billion profit. Sales for the year are expected to be ¥9 trillion, revised down from ¥9.2 trillion.

The new targets represent a slight rise in sales but a drop in profits by more than half, based on those achieved last year.

Sales of LCD (liquid crystal display) televisions, digital cameras and video cameras are expected to be lower than originally anticipated. The three categories represented by the Bravia, Cybershot and Handycam line-ups are among Sony's most popular and important product lines and have been often noted in recent quarters as behind electronics sector profits.

Sony is also being hit by the strengthening Japanese yen, which makes its products more expensive overseas and reduces the value in yen of profits brought back to Japan.

When it issued its forecast it assumed a rate of ¥105 to the U.S. dollar, but that rate has become just a memory in recent weeks as the exchange rate hovers around the ¥100 to the dollar mark. The revised figures assume the latter rate although it's already being tested. On Thursday afternoon one dollar bought just ¥97.5.

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