Sony in a Slide?

Reuters has reported that Sony Corporation is experiencing a 20% drop in profits this year, brought about by poor showings from audio and video product sales, slow markets, price wars, and a lack of hit records. The report also stated that the electronics sector, which normally generates the bulk of Sony sales, saw operating profits decline by more than half compared to the previous year.

Last month, Sony announced a dramatic restructuring that it believes will help straighten out the slide in profits in the electronic sector. Sony's senior vice president, Masayoshi Morimoto, stated that "For the time being, we just have to grin and bear it."

Last year was a record year for Sony, with the bright spot this year being the computer game market, driven by the company's PlayStation console. But price wars for electronic devices in the US, coupled with weak demand for products in Asia and Latin America, more than offset gains made in the gaming market. However, Sony says that profits may slide a little more in the near future as PlayStation sales start to sag.

Sony's restructuring will trim approximately 17,000 jobs, or up to 10% of its work force, in the next four years. The company has created four new groups, with computer entertainment and networked products forming the basis for what it hopes will be stronger electronics sales. Some analysts are reporting that profits may decline still further before the effects of the restructuring are felt, several years down the road. And, of course, it is yet to be seen whether Sony's Super Audio CD re-ignites the public's interest in high-quality recorded sound.

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