Playstation 2 sales are falling

Over the past year, Sony recorded a net profit of 88.5bn yen compared with 115.5bn yen in 2002/2003.

Sony reported its slide in profits as tech firms Sharp and Canon both reported surging profits.

Sharp recorded an 86% rise in annual net profit while Canon's quarterly net profit rose 18%.

Playstation pressure

Sony's profits were primarily hit by a 168bn yen charge which the firm took to fund job cuts at its core electronics division.

In addition, its game division suffered a 40% profit decline in 2003/04 as demand for PlayStation 2 game consoles fell.

There are potential risks in foreign exchange, price competition and higher material costs Takao Yuhara, Sony

Sony predicted the game unit's profits would fall further this year as PlayStation 2 demand continues to wane and as Sony funds development of its new hand-held game machine, PSP.

"We see digital cameras, flat-panel TVs and other digital goods remaining strong and boosting revenues, but there are potential risks in foreign exchange, price competition and higher material costs," Sony's chief financial officer, Takao Yuhara told correspondents.

Televisions and other electronic goods accounted for nearly a quarter of Japan's 54 trillion yen worth of exports in 2003.

Booming sales

While Sony was unveiling a decline in profits, other tech firms were reporting better fortunes.

Sharp said high demand for flat-screen TVs boosted profits, which rose to 60.7bn yen for the period covering the past 12 months, from 32.6bn in 2002/2003.

The Osaka-based company predicted bumper profits for the next year.

Demand for plasma screens is high

Meanwhile, Canon said booming sales in digital cameras and multi-function network copiers had contributed to its healthy profits.

Seiko Epson, Canon's competitor in the ink jet printers market, also posted an upbeat earnings report.

It said its net profit more than tripled in the latest business year on brisk demand for liquid crystal displays (LCDs) used in mobile phones.