taken from the sony spec sheet:
"2) High Quality Sound Recording and Playback
“Hi-MD” incorporates ATRAC3plus high compression and sound quality audio compression technology, realizing extended length, near CD quality sound. By also adopting a non-compressible, linear PCM
recording, “Hi-MD” compatible products enable users to enjoy the recording and playback of high-quality sound, close to the quality of commercial audio CDs."
I
've found in 3 different places where it says it used linear PCM that provides "near CD quality sound," whatever that means. To me, it sounds like it is not lossless.