Sony Posts Surprise Profit – Phone and Vita Still Week

Posted by at 12:03 am on August 1, 2014

Sony sharply cut its forecast for smartphone sales on Thursday, dealing a stiff blow to one of the pillars on which the Japanese technology giant had hoped to rebuild its troubled electronics business.

The move cast a blot on encouraging results for the first quarter ended June 30: Sony posted a small net income of Yen26.8 billion ($261 million), thanks to upbeat sales of videogames and movies, defying analyst expectations of a loss. Sales rose 5.8% to Yen1.8 trillion versus the prior-year period, while operating profit was nearly double, at Yen69.8 billion.

Sony’s troubled TV business stayed profitable, and the company said it remained on track to break a 10-year streak of annual losses there, although it did trim its sales forecast.

But Sony’s mobile-phone unit, which a year ago had been the company’s most profitable electronics division, posted an operating loss amid sagging sales, forcing the company to cut its annual sales target to 43 million handsets from the 50 million it had predicted in May. Instead of making a profit of Yen26 billion, the mobile division will merely break even this year, Sony said. In the fiscal year that ended in March, Sony sold 39 million phones and posted a profit of Yen12.6 billion.

“Our estimate in May was optimistic,” Kenichiro Yoshida, Sony’s chief financial officer, said at a news conference.

The company’s gaming division raised its sales forecasts in light of the PS4’s “strong performance.” The division now expects to post operating profit of 25 billion yen ($243 million), up 25 percent from projections. Sony attributed the revision to reduced costs in producing PS4 hardware, with the console already selling at a profit beforehand.

Sony didn’t reveal updated sales figures for the system, which launched in November 2013 and as of April 2014 sold 7 million units worldwide. However, the company did note total PS4 and PS3 shipments of 3.5 million between April and June. That’s comparable to the previous quarter’s figure of 3.7 million, suggesting PS4 sales are continuing at similar pace.

The company’s portable, meanwhile, continues to struggle. Sony revealed PSP, Vita and Vita TV shipments of 0.75 million across the quarter – that figure can primarily be attributed to Vita systems since the PSP is all but discontinued worldwide. Once again no mention of the Vita in Sony’s own earnings report.

Sony stuck with its forecast for a loss of Yen50 billion ($486 million)for the full business year that ends next March, which would be its sixth loss in seven years.

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