Sony 2000 Annual Report Download - page 59

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SONY CORPORATION ANNUAL REPORT 2000
57
In the Electronics business, although a difficult envi-
ronment, characterized by such factors as price competi-
tion and an increase in the number of competitors that
have new technologies, is expected to continue, Sony
intends to increase sales by introducing high value-added
products in the areas of digital equipment and electronic
components where Sony believes it has advantages. Re-
garding profit performance, although high levels of re-
search and development expenses aimed at developing
new products and strengthening basic technologies such
as semiconductors, telecommunications, and displays; in-
creases in depreciation expenses for investments targeted
at digital networks; increases in advertising expenses for
further sales expansion; and increases in licensing expenses
reflecting acquisition of indispensable technologies for
expansion of product lineups in information and commu-
nication areas are expected to partially offset profit, profit
is expected to increase due to sales expansion and con-
tinuing cost control efforts.
In the Game business, although overall sales are ex-
pected to increase along with the start-up of the PlayStation
2 format, sales of the PlayStation format especially in hard-
ware are expected to decrease due to generation transi-
tion and increases in the hardware penetration ratio.
Regarding profit performance, profit is expected to de-
crease principally because start-up expenses for PlayStation
2 are expected to be recorded for a period of time. In
addition, sales decreases of PlayStation hardware are ex-
pected to negatively impact profit.
In the Music business, market growth is expected to be
relatively flat due to the saturation of the CD configura-
tion in developed markets, ongoing effects of worldwide
piracy, continued diversification in customers’ preferences,
and pricing pressures. In the U.S. based Music business,
expenses associated with pursuing digital media initia-
tives are expected to negatively affect profitability. How-
ever, these factors are expected to be offset by the
continued emphasis on global cost reduction as well as
improved sales in Europe and Latin America. In the music
business in Japan, cost reductions in such areas as adver-
tising expenses are expected to improve profitability.
In the Pictures business, in the Motion Picture group,
revenue is expected to increase due to releases of certain
event films during the fiscal year ending March 31, 2001.
In the Home Video group, Sony intends to increase video
sales by focusing on the DVD format. In the Television
group, a decrease in the number of continuing network
television series is expected to reduce revenues during
the fiscal year. Expenses relating to development of new
interactive services that combine digital technology and
film and television assets, and other strategic investments
are expected to negatively affect profit.
In the Insurance business, although the life insurance
business faces increasing competition due to deregula-
tion and a continuation of the difficult environment for
managing assets, Sony intends to expand the business
through offering products suitable for customers’ needs
and further strengthening of its sales force. Start-up losses
are expected in the non-life insurance business, which
commenced operations in September 1999.
In the Other business, losses are expected in such busi-
nesses as location-based entertainment complexes in Ja-
pan and the U.S.
Amortization expenses (refer to Note 4 of Notes to
Consolidated Financial Statements) in connection with the
acquisitions of minority interests through exchanges of
stock in January 2000 are expected to negatively affect
profit for and after the fiscal year ending March 31, 2001.
In the fiscal year ending March 31, 2001, the amount
of gains on sales of investment securities and subsidiaries
is expected to decrease compared with the previous year.
In the fiscal year ending March 31, 2001, results of
certain affiliated companies are expected to improve. In
particular, equity losses from The Columbia House Com-
pany are expected to decrease from the previous year,
which included the shortened amortization periods and
the impairment of deferred advertising and certain other
expenses (refer to Note 9 of Notes to Consolidated Finan-
cial Statements).