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To: Don Green who wrote (48806)	8/2/2000 9:17:08 PM
From: Don Green	Respond to of 93625

Sony's Video Game Division Remains Mired In Earnings Slump Thursday, August 3, 2000 TOKYO (Nikkei)--Sony Corp. (6758) is projecting a fiscal 2000 operating profit of about 20 billion yen for its video game business anchored by the PlayStation2 console, about a quarter that seen a year earlier. The business booked a 16 billion operating loss for the April-June period, narrowing 9.8 billion yen from the previous quarter. Analysts agree that it will likely be able to break even on an operating basis when it starts mass-producing PlayStation2 consoles. Sony now ships each 39,800 yen console at a loss of 5,000 yen to 10,000 yen due to high production costs. A planned increase in output to around 1.2 million units a month, combined with exports to North America and Europe, will help the firm start making a profit on the business in the October-December quarter, says Merrill Lynch Japan Inc. analyst Hitoshi Kuriyama. But the video game operation's profitability will likely be heavily influenced by the availability of attractive software for the new machine. A lack of such titles is sure to delay, if not prevent, the popularization of the PlayStation2. Sony's shares have recently been trading around 10,000 yen, and lack upward mobility. Their price reflects a perception gap between Sony, which is concerned about insufficient output capacity for the PlayStation2, and market participants, who worry whether the console will draw as much demand as expected, says Kiyotaka Teranishi of Goldman Sachs (Japan) Ltd. (The Nikkei Financial Daily Thursday edition)