The Nikkei average fell 1.29 percent on Friday as shares of Sony Corp. tumbled after it forecast a sharp profit decline in the current year and as a stronger yen raised concern of a drop in earnings at exporters such as Kyocera Corp.

Companies scheduled to report full-year earnings on Friday include technology firms Toshiba Corp. and Matsushita Electric Industrial Co. Ltd. and mobile telephone firm NTT DoCoMo Inc. .

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 its too early to tell how things will turn out next year -- its stock price is having a hard time finding support.

The Nikkei was down 220.60 points at 16,893.94 as of 1415 GMT. It earlier fell more than 2 percent to its lowest intraday in a month.

The TOPIX index was down 0.91 percent at 1,713.62.

Sony lost 5.1 percent to 5,720 yen. The electronics and entertainment conglomerate on Thursday forecast a sharp fall in operating profit this business year because of start-up costs for its forthcoming PlayStation 3 game console.

Electronics components maker Kyocera lost 2.9 percent to 10,680 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 114.28 to the dollar in Tokyo trade, a little under the three-month high hit a day earlier.

Pioneer Corp. gained 3.3 percent to 2,030 yen after the struggling electronics maker posted a narrower-than-expected operating loss for the year ended in March and projected a return to a profit for the current year.

TVs, Cameras Help Japan Electronics Makers


AP Business Writer


For several years, Matsushita, Toshiba and other Japanese electronics makers have been fighting to stay competitive after being hammered by a price slump and the challenge of cheaper rivals. Their earnings reports this week show the effort is paying off.

The main products lifting profits were flat TVs, whose global demand is blossoming and expected to grow during this World Cup year, as well as digital cameras and computer chips.

But the fight is far from over.

In addition to the continued pressure from falling prices, the companies say they are facing new threats like soaring oil and commodity prices. A stronger yen, which eats into export revenues, is another danger.

Over the last two days, however, investors got some news to cheer about.

Matsushita Electric Industrial Co., which makes Panasonic products, got a big lift from its plasma display panel TVs.

Matsushita said Friday that it swung back into the black during the latest quarter at a 40.7 billion yen ($355 million) net profit and saw its profit for the fiscal year more than double on healthy sales of flat-panel TVs, digital cameras and other gadgets. It had lost 33.2 billion yen during the same period the previous year.

Toshiba Corp., the world's second largest maker of NAND flash memory chips, on Friday reported a 16 percent surge in fourth quarter profit at 41.69 billion yen ($363.9 million). Such chips are widely used in mobile phones and portable digital music players and tend to be more expensive than regular memory chips.

Booming digital camera and color copier sales lifted Canon Inc.'s profit 16 percent in the first quarter to a record 108.3 billion yen ($942 million), keeping Japan's top precision equipment maker on track for a seventh year of record yearly earnings.

Losses at Sony Corp. for the January-March quarter widened to 66.5 billion yen ($581 million), worse than the 56.5 billion yen loss it marked the same period the previous year.

Massive restructuring costs, as well as research and development costs for its usually profitable game division, were behind the red ink, but sales were slowly improving, especially in its core electronics business on the back of the success of its flat-panel TVs in a partnership with South Korean rival Samsung Electronics Co.

Still, the latest results were proof the job cuts and reshaping of product strategy the companies had undertaken were gradually proving a success.

In fiscal 2001, Matsushita posted its worst loss since its founding 80 years ago, and executives said the company was in such a serious crisis its very survival depended on a widespread overhaul.

Also getting a healthy boost from the TV success was Sharp Corp.

Osaka-based Sharp's profit surged 15 percent to a record high last fiscal year on brisk sales of sales of flat-screen televisions, mobile phones and solar batteries. Net income rose to 88.67 billion yen ($771 million) in the 12-month period ended March 31, from 76.85 billion yen the previous fiscal year. Sharp did not break down quarterly numbers.

Fujitsu Ltd., whose hard-disk drive business has been thriving, saw profits rise 16 percent in the latest quarter at 57.51 billion yen ($500 million).

Hitachi, by contrast, which didn't give quarterly data, said its profit declined 28 percent for the fiscal year that ended March 31, because of poor performances in its liquid-crystal display, plasma display panel and hard-disk drive operations. Hitachi's fiscal 2005 profit totaled 37.3 billion yen ($324 million).

Accounting Questions Raise Lay's Hackles By KRISTEN HAYS, AP Business Writer

1 hour, 18 minutes ago

Enron Corp. founder Kenneth Lay kept his temper in check under cross-examination about sensitive issues like personal stock sales and his candor, but it took one of the most arcane allegations in his fraud and conspiracy trial to raise his ire again: An accusation that he tried to dodge accounting rules.

Lay's demeanor was markedly more subdued Thursday than when prosecutor John Hueston first challenged him late Wednesday. At that time, Lay's trademark public diplomacy disappeared as he scowled and snarled repeatedly at the prosecutor.

On Thursday, Lay often appeared to treat Hueston like an irritant, but answered inquiries in a matter-of-fact tone.

Yet he chastised the prosecutor during lengthy questioning on the accounting issue.

I think it's a real waste of the jury's time. We've spent an hour on this, the ex-chairman said about allegations he had tried to skirt accounting rules requiring writedowns on an overvalued Wessex Water Ltd., a British water utility.

U.S. District Judge Sim Lake indicated the Wessex issue will have soon had its due. Defense attorneys said they expect to wrap up their case with character witnesses and experts next week, followed by another week of rebuttal witnesses from the government.

Hopefully they won't all be on Wessex goodwill impairment, the judge quipped.

Lay's cross-examination will continue Monday.

Earlier, Hueston sought to torpedo Lay's image as a company champion, trying to show he used the ailing energy giant to bail himself out of personal financial woes in 2001.

Lay obtained more than $70 million in loans from Enron throughout 2001 and repaid most with company stock, even as he encouraged employees to buy more shares.

Lay didn't disclose those stock sales publicly because regulations required that sales of shares back to a company be reported only in the year after they occur. Unlike his co-defendant in his fraud and conspiracy trial, former Enron CEO Jeffrey Skilling, Lay isn't charged with improper stock sales.

However, Lay did tell workers less than three months before Enron filed for bankruptcy protection that he had bought stock when, in fact, he had sold more shares than he bought.

Hueston displayed records for jurors that showed Lay's Enron stock ownership rose from 2.64 million shares to 2.76 million from January through October 2001. His stock purchases were reported publicly when they took place.

But the ex-chairman sold a total of 1.77 million shares back to Enron in February and from April through October that year to repay company loans.

Lay had used his Enron stock as collateral on $100 million in personal bank loans, and those lenders issued margin calls for repayment throughout 2001 as the energy giant's share price fell. He obtained cash from Enron to meet those margin calls.

I found it more convenient to use the line of credit. It was set up to provide me, and other senior executives, with more financial flexibility.

Hueston pounded at the issue, asking why Lay didn't immediately disclose the sales to investors and employees even if regulations didn't require him to do so.

Lay's eyes narrowed as he said the prosecutor seemed to be suggesting to jurors that he broke the law.

I was fully complying with all the existing regulations and requirements on my stock transactions, Lay said.

Some jurors rolled their eyes.

The government contends Lay and Skilling repeatedly lied to investors and employees about Enron's health, touting the company as strong when they allegedly knew accounting tricks masked flailing businesses and other problems.

The two defendants counter that no fraud occurred at Enron other than that committed by a few executives who skimmed money from secret side deals and blame bad publicity as well as a loss of market confidence for the company's swift descent into bankruptcy proceedings in December 2001.

Lay faces six counts of fraud and conspiracy related to the months before the company's collapse, when he took back the role of CEO following Skilling's resignation in mid-August 2001. Skilling faces 28 counts of fraud, conspiracy, insider trading and lying to auditors related to his activities from 1999 to 2001.