Sony 2000 Annual Report Download - page 49

SONY CORPORATION ANNUAL REPORT 2000
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Performance by product category
“Audio” sales decreased by 137.8 billion yen, or 12.8%, to
934.9 billion yen. This was principally due to decreases in
sales of home stereos, radio-cassette tape recorders, and
compact cassette headphone stereos. Although sales of
home stereos increased in Asia, such sales decreased in
the U.S. and South America, and also decreased in Eu-
rope, despite favorable demand, due to the yen’s appre-
ciation. The decreases in sales of radio-cassette tape
recorders and compact cassette headphone stereos were
principally due to decreases in demand in the U.S. and
Europe. However, sales of MD format headphone stereos
increased in the U.S. and Europe.
“Video” sales increased by 7.6 billion yen, or 0.8%, to 976.7
billion yen. This was principally due to increases in sales
of digital still cameras and DVD-Video players although
sales of home-use video decks and those of broadcast-
and professional-use equipment decreased. Regarding
home-use video cameras, sales of DV- and Digital 8-for-
mat video cameras increased, while those of analog 8mm
format video cameras decreased, reflecting Sony’s aggres-
sive efforts for digitization of these products and shifting
consumer demand. Sales of home-use video decks de-
creased due to the yen’s appreciation although demand
increased in the U.S. and Europe. Regarding broadcast-
and professional-use equipment, sales decreased due to
lower prices and the yen’s appreciation despite favorable
demand for digital VTR systems. Sales of digital still cam-
eras increased in all areas principally due to Sony’s efforts
to improve picture quality and further penetration of PCs.
Sales of DVD-Video players increased, especially in the
U.S., reflecting increased software lineups and higher de-
mand for home-theater use.
“Televisions” sales increased by 11.6 billion yen, or 1.6%,
to 714.2 billion yen. This was principally due to increases
in sales of color TVs and projection TVs. Regarding color
TVs, demand significantly increased in all areas, especially
in Asia and the U.S., reflecting aggressive introductions of
large-screen color TVs which incorporate flat surface CRTs.
In addition, demand for large-screen projection TVs for
home-theater use increased especially in the U.S. As a re-
sult, overall sales of both categories increased despite sales
decreases in certain areas, such as Europe where the sig-
nificant appreciation of the yen negatively affected sales.
“Information and communications” sales increased by 138.6
billion yen, or 15.2%, to 1,052.7 billion yen. This was prin-
cipally due to significant sales increases of notebook PCs
in Japan, the U.S., and Europe and increases in sales of
desktop PCs in Japan. Due to higher demand for record-
ing of large amounts of digital data, sales of CD-R/RW
drives increased, primarily in the U.S. and Asia, while those
of CD-ROM drives decreased, primarily in the U.S. and
Europe. Regarding computer displays, despite strong de-
mand primarily in the U.S., sales decreased due to the
yen’s appreciation. Despite increased sales in Japan and
Western Europe, overall sales of cellular phones decreased
due to the termination of production in the U.S. brought
about by the discontinuation of the business in North
America, excluding research and development and after-
sales service.
“Electronic components and other” sales increased by 19.7
billion yen, or 2.8%, to 717.4 billion yen. This was princi-
pally due to significant sales increases of electronic com-
ponents including CCDs, LCDs, system LSIs, and optical
pickups, reflecting higher demand for electronics prod-
ucts in all categories including digital AV equipment, such
as digital video cameras and digital still cameras, and
computer related equipment.
The increase in the cost of sales, despite the yen’s appre-
ciation, was principally attributable to the increased cost of
raw materials reflecting increases in production brought about
by favorable demand and to depreciation expenses in con-
nection with a high level of capital expenditures, primarily
for semiconductors equipment. Selling, general and admin-
istrative expenses decreased due to the yen’s appreciation
although personnel, freight, and royalties expenses increased.
Regarding profit performance by product category, that of
such products as color TVs and broadcast- and professional-
use equipment deteriorated, while that of semiconductors,
computer peripherals, optical devices, and PCs improved
reflecting higher sales of those products. The performance
of color TVs was negatively affected by increases in research
and development expenses in connection with broadcast
digitization, and that of broadcast- and professional-use equip-
ment was negatively affected by an increased number of
competitors and severe price competition. In cellular phones,
although significant losses were recorded due to additional
expenses related to the discontinuation of the business in
North America noted above, the amount of losses decreased
compared with the previous year. In addition, loss on dis-
posal of fixed assets in connection with this discontinuation
was recorded under “Other Income and Expenses.”