Sony 2003 Annual Report Download - page 127

Consolidated Financial Information 2003
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Also, SCEI plans to introduce a new, all-in-one portable entertainment platform, PSP, which utilizes a newly
developed small optical disc, scheduling a release for the third quarter ending December 31, 2004. The foundation of
this new platform is the Universal Media Disc (UMD), which is comprised of a 60mm optical disc (1.8 GB) in a
cartridge developed by Sony utilizing its latest disc technologies. Compared to the mask ROM cartridge, the optical
disc has significant advantages such as shorter turn around time for manufacturing, larger data capacity and lower
media costs. The latest copy-protection technology will be applied to offer content developers and publishers a safe
and copy-protected environment.
To establish business models which combine hardware with networks, in November 2002, Sony Corporation of
America, a subsidiary of Sony Corporation, together with other investors, executed a definitive agreement to acquire
all of the outstanding common stock of InterTrust for approximately 453 million U.S. dollars. In January 2003, the
acquisition of InterTrust by Sony Corporation of America, Koninklijke Philips Electronics N.V. of Holland, and another
investor was successfully completed. InterTrust is a leading holder of intellectual property in digital rights
management. This transaction fits with Sony’s network strategy which is to enable wide access to secure digital
content through networks.
In order to further expand its music catalogue, in August 2002, SMEI’s joint venture publishing company
Sony/ATV Music Publishing LLC purchased from Gaylord Entertainment Company the music publishing catalogue
and real estate of Acuff-Rose, a music publishing business, for 157 million U.S. dollars in cash.
Forecast of Consolidated Results
Factors which may affect Sony’s financial performance include the following: market conditions, including
general economic conditions, in major areas where Sony conducts its businesses, levels of consumer spending,
foreign exchange fluctuations, Sony’s ability to continue to design, develop, manufacture, sell, and win acceptance of
its products and services, Sony’s ability to continue to implement personnel reduction and other business
reorganization activities, Sony’s ability to implement its network strategy, and implement successful sales and
distribution strategies in the light of the Internet and other technological developments, Sony’s ability to devote
sufficient resources to research and development, Sony’s ability to prioritize capital expenditures, and the success of
Sony’s joint ventures and alliances. Risks and uncertainties also include the impact of any future events with material
unforeseen impacts.
Regarding the forecast of consolidated results for the fiscal year ending March 31, 2004, Sony expects the
uncertain economic environment to continue in this fiscal year, with personal consumption declining and price
competition intensifying. As a result, Sony’s consolidated sales, operating income, income before income taxes, and
net income are expected to decrease compared with the fiscal year ended March 31, 2003. This forecast assumes
that the yen for the fiscal year ending March 31, 2004 will strengthen against the U.S. dollar and will weaken against
the euro, in each case compared with the fiscal year ended March 31, 2003.
In response to this uncertain environment, Sony has decided to implement a restructuring program, primarily in
the Electronics segment, which will be even more aggressive than the one it implemented in the fiscal year just ended.