Consumer Electronics Giants Post Mixed Results

It's been an up-and-down week for consumer-electronics companies, as revealed by recent earnings reports surfacing around the globe. First, the bad news: Sony reports that its profits fell 32% in the latest fiscal year, and cites the strong yen for depressing the value of the consumer-electronics and entertainment company's overseas earnings.

According to Sony, its earnings fell to $1.1 billion (¥121.84 billion) in the fiscal year ended March 31, from $1.6 billion (¥179.00 billion) the previous year. With the devaluation of the dollar figured in, Sony reports that, even though sales of electronics rose a little, overall sales dropped 1.7%, to $63 billion, from approximately $64 billion a year earlier.

It was the second decline in a row for Sony, which says it expects a more modest decline this year as the dollar continues to decline from ¥110 to ¥104 over the next 12 months. However, Sony also forecasts that all of its business units except the music division will post higher sales in the coming year. In a candid statement, the company says it expects fewer hits from its record labels this year than last.

On a brighter note, Harman International is reporting that, for the recently completed third quarter of its fiscal year, sales were $423.9 million, or 13% above last year's sales of $374.9 million. If the effects of currency fluctuations are removed, Harman says that sales rose 19%, while net income increased 75%, to $22.3 million.

Over the last nine months, the company says, sales rose 14%, to just over $1.2 billion. Again excluding currency fluctuations, sales increased 19%, while net income over the same period totaled $49.5 million. Last year, Harman reported a net loss of $9.3 million after a $66.4 million pretax charge for restructuring, incurred in the quarter ended December 31, 1998. However, adding back in the restructuring charge, net income was $36.6 million through March last year; this year's net income of $49.5 million in the same period represents a 35% increase.

Company founder Dr. Sidney Harman stated that "earnings of the Consumer Systems Group increased 30%, and the earnings of the Professional Group more than doubled during the quarter. These outstanding results were achieved while the company continued to make substantial progress in the development of new technologies, products, and services." Harman says it also expects strong fourth-quarter sales, resulting in an expected annual earnings growth of 15–20%.