Nikkei hits lowest close in a month on Sony slide

Tokyo, Apr 28: The Nikkei average posted its lowest close in a month on Friday, dropping 1.22 percent as shares in Sony Corp. tumbled after the electronics giant forecast a sharp profit decline this business year.

Other exporters also fell, with shares of Kyocera Corp.

losing ground after a stronger yen raised concerns about earnings at currency-sensitive companies.

After the close of trade, Matsushita Electric Industrial Co.

, manufacturer of the Panasonic brand, posted a 34 percent gain in annual operating profit on Friday, but forecast a smaller-than-expected earnings gain for this year.

Shares of Sony slid 5.1 percent to 5,720 yen. The electronics and entertainment conglomerate on Thursday forecast that its operating profit would fall nearly 50 percent this business year because of start-up costs for its forthcoming PlayStation 3 game console.

''With Sony and the currency level, the market is sort of pinned between a rock and a hard place,'' Yoku Ihara, manager of investment information at Retela Crea Securities.

''Since Sony will have to spend too much money on its game business this year -- and it's too early to tell how things will turn out next year -- its stock price is having a hard time finding support.'' The Nikkei ended down 208.31 points at 16,906.23, its lowest close since March 28.

The TOPIX index finished down 0.75 percent at 1,716.43.

Electronics components maker Kyocera lost 3.4 percent to 10,630 yen as investors worried that exporters' earnings would be squeezed by a stronger yen.

A strong yen is a negative for Japan's exporters, as it eats into profits when earnings from abroad are brought home. The yen was at 114.16 to the dollar in Tokyo trade, not far off the three-month high it hit a day earlier.

Fellow exporter Fanuc Ltd., a maker of industrial robots, declined 2.8 percent to 10,770 yen.

Pioneer Corp. gained 2.5 percent to 2,015 yen after the struggling electronics maker posted a narrower-than-expected operating loss for the year ended in March and projected a return to profit for the current year.

Unlike Sony's earnings, investors hadn't been expecting a strong showing from Pioneer's results, said Junichi Misawa, senior fund manager at STB Asset Management.

''Investors have had too strong expectations for companies that are doing well, such as Sony. But for companies that aren't doing as well, such as Pioneer, there have been no positive expectations.'' ''In that sense, its results are a plus.'' Trade was relatively active, with 1.74 billion shares changing hands on the Tokyo exchange's first section, although that was well below last year's daily average of 2.07 billion shares.

Decliners beat advancers by a ratio of nearly 2 to 1.

Reuters