by CIO Staff

Sony Bounces Back to Profit in Q1

Jul 27, 20063 mins
IT Leadership

Sony returned to profit in the April-to-June quarter on the back of higher sales in its electronics division and a strong debut for “The Da Vinci Code” movie. It was the first time in four years that Sony recorded an increase in electronics division operating profit in its fiscal first quarter.

The company reported a net profit of 32.3 billion yen (US$277 million) against a 7.3 billion yen net loss in the same period a year earlier. Sales rose 11 percent to 1.7 trillion yen on higher sales of electronics products, including Bravia flat-panel televisions and its new Alpha digital still camera.

Sony’s key electronics division returned to profit posting a 47.4 billion yen operating profit on 13.5 percent higher sales of 1.1 trillion yen. In addition to flat-panel TVs and digital cameras, Vaio laptop sales were higher, but those of plasma display panel and cathode ray tube TVs fell.

Sony Headquarters
Sony Headquarters

“We believe the electronics business is steadily moving along the road to recovery,” said Nobuyuki Oneda, Sony’s chief financial officer, speaking at a Tokyo news conference.

The games unit reported lower revenues as PlayStation 2 and PlayStation Portable (PSP) sales fell compared to the same period last year. The unit recorded a loss of 26.8 billion yen for the three-month period. Sony shipped 2.5 million PlayStation 2s during the quarter, down 1 million units year on year. PSP shipments were 2 million, down slightly from the same period a year ago.

“Despite more than six years have elapsed since the launch of the PlayStation 2, demand remains strong and we have increased our shipping forecast for the year,” said Takao Yuhara, senior vice president of Sony. The company now expects full-year shipments of PlayStation 2 consoles to be 11 million units, up 1 million from the forecast it gave in April. About 12 million PSPs and 6 million PlayStation 3 consoles are expected to be sold in the fiscal year that ends March 2007.

Strong results from Sony Ericsson Mobile Communications, which reported 41 percent higher sales on 33 percent higher unit shipments, also helped Sony’s bottom line to the tune of 10.2 billion yen.

The company’s ongoing restructuring is on plan, said Oneda. Of the 200 billion yen in cost savings the company wants to achieve, 76 billion yen has been realized by the end of June, he said. The targets for plant closure and consolidation and workforce reduction have already been reached, while Sony still needs to work on reducing the number of product models it sells.

Looking ahead, the company raised its full-year sales and operating profits forecast. It now expects to record sales of 8.23 trillion yen, up 30 billion yen on its previous prediction. Its operating profits forecast has been raised by a similar amount to 130 billion yen. Its net income forecast of 130 billion yen remains unchanged. The upgrade in forecasts is due to a reclassification of royalty income as a component of sales and operating revenue rather than other income, Sony said.

-Martyn Williams, IDG News Service (Tokyo Bureau)

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