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Sony Looking For Further Cuts In Production Costs

| 3 Apr 2008 15:03
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Sony has said it will attempt to cut production costs even further to compensate for reduced export profits caused by the strengthening yen.

The eroding U.S. dollar has seen the Japanese currency make significant gains over the past year, a situation resulting in reduced profits from the company's exports. That in turn could leave the company unable to make further cuts in PlayStation 3 prices in the foreseeable future, according to a Forbes.com report, leaving the company vulnerable to price reductions in the competing Xbox 360 and Wii consoles.

"As to the situation of the U.S. dollar's weakness in the medium to long term, we already have a strategy to deal with it," Sony President Ryoji Chubachi said at a news conference in Taipei. "We will lower our production costs as possible as we can and we will choose production sites to cope with the industry's weakness, and in the short term, we will try to accept more orders."

Sony loses roughly $59 million for every one yen rise in the value of the Japanese currency against the U.S. dollar; this year alone, the yen has jumped from 111 per dollar to 102.5, reaching as high as 95.7 yen per dollar in March. Sony earns approximately 75 percent of its revenues from overseas sales.

KBC Securities Japan recently downgraded its investment rating for Nintendo, also due to an increase in the value of the yen which it said would adversely impact Nintendo's overseas sales.

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