Pre-tax profit fell 9.8 percent to 4.41 billion yen in the September quarter from 4.88 billion yen a year earlier, Sony said in a statement.

In contrast, group sales rose slightly to 1.797 trillion yen in July-September from 1.789 billion yen in the same quarter of last year.

Sony revised down its forecast for pre-tax profit to 120 billion yen for the full year to March 2004 from the previous projection of 130 billion yen made in July.

But the company said it left its forecast for net profit and sales for the year unchanged at 50 billion yen and 7.4 trillion yen, respectively.

The group set a new internal dollar exchange rate at 110 yen for the six months to March 2004, compared with 115 yen set earlier. Its assumption for the euro exchange rate for October-March was set unchanged at 125 yen, the company said.

"Although second-quarter sales and profit in the game segment declined, the electronics area, where we have been trying to boost products, began to recover," said Sony chairman and group chief executive officer Nobuyuki Ide in a statement.

Sony said the relatively small decline in pre-tax profit was "due to a year-on-year improvement and the net effect of other incomes and other expenses resulting from a net foreign exchange gain, compared with a net foreign exchange loss a year earlier."

A year-on-year decrease in securities investment losses also helped slow the fall in pre-tax profit, the company said.

In the six months to September, Sony's group net profit fell 66.4 percent to 34.0 billion yen from 101.2 billion yen a year earlier.

Group pre-tax profit declined by 51.8 percent to 79.8 billion yen in April-September to 165.5 billion yen.

Sales in the six-month fell 3.2 percent to 3.4 trillion yen from 3.5 trillion yen.

SPACE.WIRE