Sony 2008 Annual Report Download - page 7

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5
Entertainment Inc. (SPE) has expanded its theatrical, home entertainment
and local language production businesses into markets across the globe,
and has set the stage for future growth. In fi scal year 2008 a number of
exciting new releases, including Hancock starring Will Smith and Quantum
of Solace, the latest James Bond fi lm starring Daniel Craig, are expected
to contribute to our results.
Sony Financial Holdings—which accounts for a majority of the revenue
of our Financial Services segment—launched a successful initial public
offering in fi scal year 2007, despite a very challenging market environment.
The life insurance, non-life insurance and banking businesses all continued
to grow steadily. However, valuation losses on the portfolio in the life
insurance businesses, caused by the signifi cant decline in the Japanese
stock market, negatively impacted segment results.*
Finally, our key joint ventures, including Sony Ericsson Mobile
Communications AB and SONY BMG MUSIC ENTERTAINMENT—
contributed signifi cantly to net income for the year.
On a consolidated basis, Sony recorded operating income of ¥375
billion, which was fi ve times the prior year’s results of ¥72 billion. The
operating profi t margin achieved was 4.2%, shy of the company’s 5%
goal, primarily as a result of the portfolio valuation losses in the life insur-
ance businesses noted above. We achieved net income of ¥369 billion
for fi scal year 2007, a 192% improvement over the prior fi scal year and
a record high.
In short, over the past three years, we have successfully restructured
our company by exiting businesses, eliminating costs and creating a strong
foundation going forward. Our job, however, is not complete. We must
continue our transformation into a company that successfully grows and
innovates—and does so profi tably. In doing so, we need to keep Sony’s
strengths while, at the same time, embracing new business models,
developing new technologies and delivering new products and services
that our increasingly savvy customer base demands. To do this, Sony
must establish a reputation for software and services that matches our
reputation for hardware and content. Our mission is to be the leading
global provider of networked consumer electronics and entertainment.
As we will outline in more detail in the pages that follow, there are many
opportunities that lie before us, and we must aggressively pursue them.
We have the talent, the resources, the experience and the will. We intend
to make signifi cant investments in growing our businesses, and we will
do so in a measured and disciplined way.
As you will read, we are undertaking three priority actions.
* 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.
08SonyE_P1_P13_0804.indd 508SonyE_P1_P13_0804.indd 5 08.8.7 2:17:39 PM08.8.7 2:17:39 PM