Wed, Jun 23, 2004 - Page 11 News List

Sony may raise camera forecast

SHARP FOCUS The world's second-biggest maker of consumer electronics says that improved image quality is impressing shoppers, and digital camera sales will reflect it

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Sony Corp, the world's second-biggest consumer electronics maker, may raise its forecast for digital camera sales by 10 percent as camera users increasingly switch to digital pictures, attracted by improved image quality.

Sony may increase its target to 16.5 million cameras from sales of 15 million it forecast in April, said Katsuya Nakagawa, head of product planning for the company's Cyber-shot cameras.

Sony expected industry shipments to rise 55 percent this year. In the first four months, they increased 69 percent compared with the same period a year earlier.

Sony President Nobuyuki Idei said he's looking to products such as the DSC-T1 Cyber-shot camera to help boost profitability at the electronics division, which had a ?35.3 billion (US$325 million) operating loss in the last fiscal year. Digital camera sales show no signs of slowing growth, Nakagawa said.

"We have to see how this plays out," said Koichi Hariya, analyst at Mizuho Securities Co in Tokyo. "Profitability at Sony's digital camera operations declined last fiscal year, even as sales grew," excluding a special charge related to a law suit in the prior year, said Hariya, who has a "reduce" rating on the stock. The company does not disclose profit or sales by product category.

In April, Tokyo-based Sony forecast total industry shipments may rise between 39 percent and 51 percent to as much as 65 million units in the business year to March 2005, compared with a 54 percent increase in the previous year.

Camera prices have stabilized, according to Nakagawa. Average selling price in Japan has stopped declining since the latter half of last year, with higher priced single-lens reflex models, such as Canon Inc's EOS Kiss Digital, taking more market share. In the US, where prices fell 15 percent last year, the decline has been less than 10 percent so far, he said.

Procuring camera parts, including liquid crystal display screens, image sensors, and lenses, which already are in tight supply, may present challenges to manufacturers, Nakagawa said.

Sony, also the biggest maker of image processors, made about 60 percent of the components for its DSC-T1, which holds the biggest share of the Japan market. Using more internally built parts will enable Sony to more quickly deliver its most advanced products, as well as keep production costs down, he said.

Canon, the world's second-biggest seller of digital cameras after Sony and Rochester, New York-based Eastman Kodak Co, which set up a new division last year in Japan to enhance its digital camera line-up, are both providing increased competition for Sony's product range.

Sony expects the global digital camera market to grow about 30 percent in the year ending March 2006, to 82 million units, Nakagawa said.

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