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Fri, 24 Oct 2008 Sony shares sink on earnings revision

Investors reacted to Sony's earnings revision by pushing the price of its shares down to levels not seen for 13 years

Martyn Williams

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Investors reacted to Sony's earnings revision by pushing the price of its shares down to levels not seen for 13 years on Friday morning.

The shares closed at ¥1,998, down 13 percent, on the Tokyo market. That's a little off the low point of the morning of ¥1,983 recorded just before 10 a.m.

On Thursday evening Sony 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. Its net profit outlook for the year from April 2008 to March 2009 was cut by 38 percent to ¥150 billion (US$1.5 billion). And sales for the year were revised down slightly to ¥9 trillion.

Sony blamed the strong Japanese yen, which makes its products more expensive overseas and reduces the value in yen of profits brought back to Japan, and weak demand for key products including Bravia LCD (liquid crystal display) TVs, Cybershot digital cameras and Handycam digital video cameras.

Sony's warning also pulled down the entire consumer electronics sector. Many of Japan's large electronics companies are big exporters and the strengthening yen will likely hit them too.

At market close, Panasonic shares were down 12 percent, Sharp down 14 percent and Toshiba down 9 percent on the day.

Also weighing on the market was the first drop in quarterly sales in seven years at Toyota, which like Sony is a major exporter, and yen hitting decade highs against the dollar.

The entire market as measured by the Nikkei 225 index closed down 812 points, or 10 percent, at 7,649 points.

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