Sony 2008 Annual Report Download - page 52

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April 1, 2008 to produce such high-performance semiconduc-
tors with the above-mentioned production equipment made
available to the joint venture by Toshiba. In addition, on March
31, 2008, upon the expiration of their contract, Sony and
Toshiba terminated Oita TS Semiconductor Corporation,
a manufacturing joint venture located within Toshiba’s Oita
Operations. Following the termination of the joint venture,
Sony sold the related manufacturing equipment to Toshiba
on April 1, 2008.
■ GAME
In the Game segment, Sony will continue to strive to significantly
improve the profitability of the PS3 business through an
enhanced line-up of software, expansion of the platform and
hardware cost reductions. At the same time, in order to expand
the business domain of PS3, Sony will actively engage in the
upgrade and expansion of networked service and content. As
for PLAYSTATION®2 (“PS2”), which is in its ninth year since
release, Sony expects a decrease in unit sales volume, including
hardware and software, in comparison to the previous fiscal
year. However, on the back of worldwide hardware expansion,
there are plans for a diversified portfolio of software titles to be
released, and, thus, Sony will strive to maintain the scale of this
business. In addition, Sony will promote the further expansion of
the PSP® (PLAYSTATION® Portable) (“PSP®”) platform, for which
hardware unit sales increased significantly compared to the
previous fiscal year, by improving the breadth of software titles,
functionality and services in the fiscal year ending March 31, 2009.
■ PICTURES
In the Pictures segment, Sony faces intense competition, rising
expenses, including advertising and promotion expenses, and a
growing trend toward digital piracy. In addition, the DVD format
is 11 years old and is showing signs of maturation. To meet
these challenges, Sony is working to produce and acquire a
diversified portfolio of motion pictures with broad worldwide
appeal for distribution including those existing and new home
entertainment formats, such as Blu-ray, and other emerging
platforms, including digital download.
■ FINANCIAL SERVICES
In the Financial Services segment, the value of assets accumu-
lated by businesses has grown continuously over the past
several years, resulting in a large portion (approximately 45
percent as of March 31, 2008) of Sony’s total assets being
accounted for by the Financial Services segment. To strengthen
asset management and risk management in parallel with this
growing asset value, enhance disclosure of business details,
and offer customers integrated financial services tailored to their
individual needs, Sony established Sony Financial Holdings Inc.
(“SFH”) in April 2004. SFH functions as a holding company
overseeing Sony Life Insurance Co., Ltd. (“Sony Life”), Sony
Assurance Inc. (“Sony Assurance”) and Sony Bank Inc. (“Sony
Bank”), with the aim of increasing the synergies among these
businesses.
Sony is confronted by changes in the financial services
industry as a result of the deregulation and liberalization of
additional insurance premiums, postal privatization, the
complete lifting of the ban on the sale of insurance products
by banks, and the lifting of the ban on the securities interme-
diary services by banks and others. Sony also faces macro-
economic challenges including Japan’s declining population,
low birthrate and growing proportion of elderly citizens. In
response to this changing environment, each of Sony’s
financial services businesses, which are latecomers to the life
insurance, non-life insurance and banking industries, make
use of distinctive, individual industry-specific business models
and plan to achieve further business expansion and even
higher levels of customer satisfaction.
On October 11, 2007, in conjunction with the global initial
public offering of shares of SFH, the shares of SFH were listed
for trading on the First Section of the Tokyo Stock Exchange
(“TSE”). This offering aimed to achieve the efficient redistribution
of management resources within Sony Group as a whole, and
establish SFH’s self financing, which is necessary for the further
expansion of its financial businesses and independent growth.
Following this global offering, SFH remains a consolidated
subsidiary with Sony Corporation as the majority shareholder,
holding 60 percent of shares issued by SFH.
OPERATING RESULTS
Operating Results for the Fiscal Year Ended March 31, 2008
compared with the Fiscal Year Ended March 31, 2007
OVERVIEW
Sony’s sales and operating revenue (“sales”) for the fiscal year
ended March 31, 2008 increased 6.9 percent compared with
the previous fiscal year. Sales within the Electronics segment
and the Game segment increased while sales for the Pictures
segment and revenue for the Financial Services segment
decreased. In the Electronics segment, while there was a
decline in sales of such products as LCD rear-projection
televisions, sales to outside customers increased 9.0 percent
compared with the previous fiscal year mainly due to an increase
in sales of LCD televisions, PCs and compact digital cameras.