Sony’s quarterly profit surges to $861M
TOKYO (AP) – Sony expects a smaller annual loss after blockbuster movie releases, cost cuts and robust holiday gadget sales boosted quarterly earnings more than sevenfold.
The Japanese manufacturing icon, known for products like the PlayStation 3 game console, Thursday said its net profit for the October-December quarter jumped to 79.2 billion yen ($861 million) from 10.4 billion yen a year earlier.
Robust revenue from movies, personal computers and financial services lifted revenue by 4 percent to 2.24 trillion yen ($25.1 billion).
Sony said it benefited from strong worldwide theater releases such as "2012" and "Michael Jackson's This is It," as well as home DVD sales of titles like "Angels & Demons."
Since taking over in 2005, Sony CEO Howard Stringer has been trying to unite the company's sprawling business, improve efficiency and rein in costs.
The Tokyo-based company's latest results suggest the Welsh-born CEO's initiatives are paying off, pushing Sony toward a recovery next year with a helping hand from the global economic recovery.
"I don't expect a very rapid recovery of the economy," said Nobuyuki Oneda, Sony's chief financial officer. "But it looks to have bottomed out, and I think we should be able to manage."
The maker of Bravia TVs and Cyber-shot cameras credited ongoing restructuring and better currency exchange rates for turning its consumer products and devices division profitable again.
The company has cut 20,000 jobs and aims to shave 330 billion yen in costs this year. It will have closed 12 factories by May.
As a result, Sony swung to an operating profit, which some analysts see as the best indication of a company's pure business performance, of 146.1 billion yen ($1.6 billion). The Tokyo-based company booked an operating loss of 18 billion yen a year earlier.
The company's PC business also did well, in large part due to higher sales of Vaio computers.
Gaming consoles declined mainly due to lower sales of the PlayStation 2 and PSP portable device. But PlayStation 3 sales jumped more than 40 percent to 6.5 million units during the quarter, Sony said.
Sales of the PlayStation 3 surged to U.S. record in December after a 25 percent price cut ahead of the key holiday shopping season. Until the cut, the console lagged behind its rivals, in large part because it came with a bigger price tag.
Sony trimmed its forecast of losses for the fiscal year ending March 2010.
It now expects a net loss of 70 billion yen, a 22 percent improvement from its previous loss forecast of 95 billion yen. It predicts an operating loss of 30 billion yen instead of a 60 billion yen loss it forecast in October.
Stringer has said Sony aims to be profitable in gaming and flat-panel TVs in the year ending March 2011 and is pushing 3-D technology as a key strategy. Sony has new 3-D TVs in the works and is targeting sales of more than 1 trillion yen ($11.2 billion) in 3-D products by the fiscal year through March 2013.
But the same rivals that Sony has struggled against in recent years, such as South Korea's Samsung Electronics Co., are certain to make a similar push in 3-D and other technologies. This would only increase pressure on Stringer to deliver on his promise of "synergy" to fully exploit Sony's strength in entertainment to boost profit for its core electronics business.
Sony is also hoping to jump into the tablet computer market, which Oneda described as a growth area now that Apple has introduced the iPad.
The company does not expect the iPad to significantly shrink demand for its well-received e-readers. Instead, the iPad represents a new player that straddles a world between smartphones and netbooks, he said.
"We are confident we have the skills and technologies to create such products," Oneda said, without mentioning specific product plans.
"Time-wise, we are a little behind the iPad, but that is definitely a space in which we would like to be an active player."
Kota Ezawa, an analyst at Citigroup Global Markets Japan, said Sony's brand and global marketing prowess are "trump cards" that could fuel future growth against rivals like Samsung and Apple Inc.
"Earnings are recovering more quickly than we expected," he said in a recent report. "If Sony executes on decisive restructuring measures, we think it should be able to maintain the competitiveness that will make an improved profit outlook possible."
In trading Thursday, Sony shares fell 2.2 percent to 3,075 yen, while the Nikkei 225 stock index lost 0.5 percent.
Sony reports earnings based on Japanese accounting standards.