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Sony Sees No Change in U.S. Gadget Appetite

Posted on: Thursday, 3 July 2008, 00:55 CDT

Sony Corp. said on Tuesday that it is seeing little or no change in the sales of its line of digital TVs, cameras and PCs during an economic slump. However, regional executive Stan Glasgow said Sony is facing pressure on margins from both spiraling costs for energy and raw materials and pricing overseas product costs into weaker dollars.

"That's the problem," Glasgow told reporters in San Francisco.

Glasgow said Sony would be doing everything it can to boost mix of component procurement and operations it bills in dollar terms instead of other currencies. The company will begin using tighter distribution lines and simpler packaging, but U.S. plant production will remain the same, he said.

Sony has developed its M-series line of electronics in Mexico using lower cost components than from Japan, he said, and are aimed at consumers who might not buy its high-end goods, providing a likely avenue for more cost savings.

Sony products such as digital TVs and related accessories and Blu-ray high-definition video players have made Sony the overwhelming U.S. market leader. Glasgow said he sees no reason for this to change in the future.

"We are not seeing clear signs of softness," Glasgow said. "In the high end, it is hard to keep up with the full demand," he said.

Glasgow did admit some weakness in sales of digital camcorders over recent months, de to the fact that the must-have status lies with flat-panel TVs right now.

"We saw some weakness in April, followed by a rebound in May and June," Glasgow said. "I don't know if it's a summer thing or not," he said of the apparent rebound in the past two months.

For the fiscal year ending March 31, 2008, the electronics business reported a 2 percent decline in Japan, a 2 percent increase in the U.S. market and an 11 percent jump in European sales, all in yen currency terms, according to its annual report.

"I didn't see so much good in the economic forecasts," Glasgow said referring to the start of Sony’s current fiscal year that began in April.

“I am saying we are doing well," he said in response to repeated questioning by reporters over the threat that a sinking U.S. economy may pose to demand for its products.

"Sony Electronics is growing at a substantial level in the U.S." relative to the fiscal year that ended in March of this year, he said. "We are exceeding the aggressive goals we set."

Sony, once a company that pursued only high-end markets, has made a dramatic change over the past two years. But Glasgow said this change doesn’t imply that the company has shifted away from high-end products.

"We are increasing our (product) mix overall," Glasgow said of how the company has moved to embrace the market for mid-priced products sold in mass market retailers such as Wal-mart. "(But) ... not giving up on the high-end."

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On the Net:

www.sony.com

Source: redOrbit staff and wire reports

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