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9
Results of Revitalization Plan
Fiscal year 2005 – 2007
Financial Results
On a consolidated basis we targeted a 5% operating profi t margin
for the year ended March 31, 2008 (fi scal year 2007), and nearly
achieved this goal, recording a 4.2% margin. External factors—
primarily the effect of the decline in the Japanese stock market*—
prevented us from attaining our 5% goal, but on an operational
basis we have created a structure through which we believe a 5%
margin can be reached.
The Electronics segment represents approximately two-thirds of
our consolidated sales, and due to its previous struggle for profi t-
ability, the revitalization plan announced in 2005, focused on
achieving a 4% operating profi t margin target in fi scal year 2007.
Thanks to a review and comprehensive overhaul of our products,
technology and operations, very strong profi t contributions from
such products as Cyber-shot™ compact digital cameras,
Handycam® camcorders and VAIO™ PCs helped us to achieve
an operating profi t margin of 5.4% for the Electronics segment.
This signifi cantly surpassed our target and is a notable achieve-
ment given that the business had nearly zero profi t just three
years prior.
We achieved all of the other goals we set for the three-year
period, including our asset sales and cost reduction targets, as
well as reductions in our product categories, headcount, and
manufacturing sites.
These successes, as well as the divisional successes discussed
below, have had tangible results. Over three years Sony’s revenues
increased 23% to nearly ¥9 trillion, and both operating income and
net income more than doubled to ¥375 billion and ¥369 billion,
respectively.
Highlights by Business
In addition to the success in restructuring our cost base, each of
our businesses—independently and together—achieved notable
accomplishments over the past three years.
A few of the highlights are as follows:
• Succeeded in making Blu-ray Disc™ the de facto industry stan-
dard, achieved by Sony’s electronics, game, pictures, music,
disc manufacturing and marketing teams working together
alongside our partners in the Blu-ray Disc Association
• Eliminated the constraints in our corporate structure that kept
Sony employees and technology from achieving their full
potential
• Launched the BRAVIA™ brand of LCD televisions, and took a
strong position in each major market
• Became the fi rst to bring to market organic light-emitting diode
(OLED) televisions
• Greatly enhanced our digital imaging business through signifi -
cantly improved market share and profi tability from Cyber-shot
compact digital cameras, a continued leading position with
Handycam® camcorders and the launch of our α (“alpha”) line
of digital SLR cameras
• Executed our “Asset Light” strategy for semiconductors, specifi -
cally the sale of certain production equipment while maintaining
semiconductor design functions
• Sony Ericsson Mobile Communications AB (Sony Ericsson)
increased its market share and brand image through the sale of
hundreds of millions of phones, including many Walkman®- and
Cyber-shot-branded phones
• Continued success with the PlayStation®2 platform, renewed
success with the PSP® (PlayStation®Portable) platform, and the
launch of the PLAYSTATION®3 (PS3™) platform—which repre-
sents a group-wide effort and signifi cant contributor to the
acceptance of Blu-ray Disc
• Built core franchises in the Pictures segment and strengthened
home entertainment, television programming and local language
production to diversify revenue streams
• Improved our position in the music business through expanded
artist rosters, streamlined operations and expanded digital dis-
tribution models as well as strategic acquisitions of music pub-
lishing businesses
• And fi nally, the very successful initial public offering of a minority
stake in Sony Financial Holdings
9
* Specifi cally, the deterioration of net valuation gains from convertible bonds and
an impairment loss on equity securities in Sony Life’s general account, which
negatively impacted our consolidated operating income on a U.S. GAAP
basis.
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