Sony 2007 Annual Report Download - page 6

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4
Over the course of fiscal year 2006 (the year ended March 31, 2007), Sony has taken many
important and successful steps toward the completion of its revitalization plan announced in
September 2005. In the year that lies ahead, we expect to complete the transition from revitalization
to enhanced growth and profitability.
During fiscal year 2006, we achieved or exceeded many of the targets we had set for ourselves.
First, under Dr. Chubachi’s leadership, our key Electronics business recorded an operating margin
of over 4% (excluding one-time and restructuring charges1) and, in doing so, achieved its goal a
full year ahead of our plan. Notable achievements included our Cyber-shot™ digital cameras
recording greatly improved profitability and our BRAVIA™ LCD televisions capturing the No. 1
position worldwide2. In addition, our Handycam® video cameras continued to perform extremely
well. Sony Ericsson Mobile Communications AB, our equity method joint venture with LM Ericsson
of Sweden, reported strong growth in profit and increased market share led by the great success
of its Walkman® and Cyber-shot mobile phones.
Second, during calendar year 2006 our Pictures division set a number of box office records
worldwide, including a record 13 No. 1 opening weekends and record total box office revenue in
the U.S. market and our most successful theatrical release year ever in markets outside of the
United States. Films such as The Da Vinci Code, Talladega Nights: The Ballad of Ricky Bobby,
Click and The Pursuit of Happyness were among the significant contributors to this success.
Third, we launched the newest PlayStation® platform, PLAYSTATION®3 (PS3™), and 5.5 million
units were shipped by fiscal year-end. The PLAYSTATION®Network (PSN), the online service
launched together with PS3, opens up new potential revenue streams for the company from
online transactions. The opportunity presented by PS3 is enormous, and we are very excited to
have recently completed the worldwide launch.
A number of our restructuring targets were also achieved more than a year ahead of plan.
These include our asset disposal and head-count reduction targets. We fully expect to achieve
all of the other targets established in September 2005, including a consolidated operating margin
of 5% for the year ending March 31, 2008.
While we are proud of what we achieved during the past year, there were also considerable
difficulties. In particular, we encountered problems with Sony-manufactured lithium-ion laptop
battery cells, which significantly impacted our financial results, and with the cutting-edge technology
of blue laser diodes critical to the Blu-ray Disc™ drive in PS3. We have taken aggressive steps to
Letter to Shareholders: A Message from Howard Stringer, CEO
1Includes ¥37.4 billion of restructuring charges and a ¥51.2 billion provision for expenses relating to a notebook computer battery pack
recall and our voluntary global replacement program
2DisplaySearch, revenue basis for calendar year 2006