Thursday January 27, 6:38 am ET
By Yuri Kageyama, AP Business Writer
Sony Reports Third-Quarter Earnings Climb 55 Percent Rise to $1.4 Billion Despite Sluggish Sales
TOKYO (AP) -- Sony Corp. reported Thursday a 55 percent rise in earnings for the October-December quarter on home entertainment revenue from "Spider-Man 2," although its core electronics sector was battered by sluggish sales and price declines.
The Tokyo-based electronics and entertainment giant said its group net profit for the fiscal third quarter totaled 143.8 billion yen ($1.4 billion), up from 92.6 billion yen a year earlier.
Sales for the quarter dipped 7.5 percent to 2.15 trillion yen ($20.9 billion) from 2.32 trillion yen.
Sony's profits got a lift from improved results at Sony Ericsson Mobile Communications, its mobile phone unit, as well as from newly established Sony BMG, a music division. Solid home entertainment sales also added to profits.
But the electronics sector suffered as sales of products that were once pillars of Sony's power, such as TVs and portable music players, declined. Falling prices of components and other gadgets also hurt results, Sony said.
Sony kept its profit outlook for the full fiscal year through March 31 at 150 billion yen ($1.5 billion), up from 88.5 billion yen the previous year.
In recent years, Sony has suffered from competition from cheaper Asian rivals such as Samsung Electronics, with which it has set up a joint venture in liquid-crystal displays. It has also fallen behind Japanese rivals such as Sharp Corp. in LCD TVs and Matsushita Electric Industrial Co., which makes Panasonic brand products, in DVD recorders.
Analysts say Sony missed the boat with portable music players by dallying in offering products capable of playing MP3 music files, taking a beating from the iPod by Apple Computer Inc.
Sony Chief Executive Nobuyuki Idei promised a turnaround despite intense competition in the industry. The company recognizes that its products must be revamped, and will focus on rear-projection and LCD TVs and beef up its camcorder lineup, he said.
"We are resolutely working to ensure a revitalization in the profitability of the Sony Group," Idei said.
Kazumasa Kubota, an analyst with Okasan Securities in Tokyo, said Sony underestimated the growth potential of new products such as LCD TVs. But Sony still has a well-known brand and massive marketing may allow it to make a comeback if it makes the right decisions, he said.
"The company knows it's not doing well now, and the market knows that as well," he said. "But Sony may be going through its darkest period now."
Kubota and other analysts say Sony's past successes were an obstacle for the company in embarking on innovative products that would compete against its own hit products. Sony, owning a massive music and movie library, also got bogged down in proprietary concerns and got a late start in gadgets that run open formats.
Sales in Sony's electronics sector slipped 0.9 percent in the October-December period, while operating income plunged 23 percent to 49 billion yen ($476 million) from 64.4 billion yen in the same period a year earlier.
In the video-game division, sales of PlayStation 2 consoles tapered off and prices were slashed. Operating profit in the division sank 37 percent for the quarter to 44.6 billion yen ($433 million) from 70.5 billion yen.
The PlayStation Portable, or PSP, the handheld version of Sony's hit game machine, went on sale in Japan on Dec. 12 and is scheduled to go on sale in the United States and Europe later this year. Sony said it sold 510,000 PSP machines, a healthy number, so far but needs to boost production to keep up with demand.
Sony Pictures Entertainment provided one bit of bright news, where home entertainment revenue was led by "Spider-Man 2" and the TV show "Seinfeld."
DVD and video shipments for the two titles totaled 30 million, Sony said. Strong box office offerings included "The Grudge" and "Christmas with the Kranks," but "Spanglish" was a disappointment.
Operating profit in films for the quarter more than tripled to 18.6 billion yen ($180 million) from 5.6 billion yen the previous year, while sales jumped 12 percent.
Quarterly operating income at Sony's music unit plunged 26 percent to 12 billion yen ($116 million) from 16 billion yen. But the numbers aren't directly comparable with the previous year because of the establishment of Sony BMG in August, a joint venture with Bertelsmann AG, in which each owns a 50 percent stake.
Sony shares, which have gradually fallen to about half of what they were five years ago, fell 0.5 percent to 3,790 yen ($37) on the Tokyo Stock Exchange Thursday, before earnings were announced.
By Yuri Kageyama, AP Business Writer
Sony Reports Third-Quarter Earnings Climb 55 Percent Rise to $1.4 Billion Despite Sluggish Sales
TOKYO (AP) -- Sony Corp. reported Thursday a 55 percent rise in earnings for the October-December quarter on home entertainment revenue from "Spider-Man 2," although its core electronics sector was battered by sluggish sales and price declines.
The Tokyo-based electronics and entertainment giant said its group net profit for the fiscal third quarter totaled 143.8 billion yen ($1.4 billion), up from 92.6 billion yen a year earlier.
Sales for the quarter dipped 7.5 percent to 2.15 trillion yen ($20.9 billion) from 2.32 trillion yen.
Sony's profits got a lift from improved results at Sony Ericsson Mobile Communications, its mobile phone unit, as well as from newly established Sony BMG, a music division. Solid home entertainment sales also added to profits.
But the electronics sector suffered as sales of products that were once pillars of Sony's power, such as TVs and portable music players, declined. Falling prices of components and other gadgets also hurt results, Sony said.
Sony kept its profit outlook for the full fiscal year through March 31 at 150 billion yen ($1.5 billion), up from 88.5 billion yen the previous year.
In recent years, Sony has suffered from competition from cheaper Asian rivals such as Samsung Electronics, with which it has set up a joint venture in liquid-crystal displays. It has also fallen behind Japanese rivals such as Sharp Corp. in LCD TVs and Matsushita Electric Industrial Co., which makes Panasonic brand products, in DVD recorders.
Analysts say Sony missed the boat with portable music players by dallying in offering products capable of playing MP3 music files, taking a beating from the iPod by Apple Computer Inc.
Sony Chief Executive Nobuyuki Idei promised a turnaround despite intense competition in the industry. The company recognizes that its products must be revamped, and will focus on rear-projection and LCD TVs and beef up its camcorder lineup, he said.
"We are resolutely working to ensure a revitalization in the profitability of the Sony Group," Idei said.
Kazumasa Kubota, an analyst with Okasan Securities in Tokyo, said Sony underestimated the growth potential of new products such as LCD TVs. But Sony still has a well-known brand and massive marketing may allow it to make a comeback if it makes the right decisions, he said.
"The company knows it's not doing well now, and the market knows that as well," he said. "But Sony may be going through its darkest period now."
Kubota and other analysts say Sony's past successes were an obstacle for the company in embarking on innovative products that would compete against its own hit products. Sony, owning a massive music and movie library, also got bogged down in proprietary concerns and got a late start in gadgets that run open formats.
Sales in Sony's electronics sector slipped 0.9 percent in the October-December period, while operating income plunged 23 percent to 49 billion yen ($476 million) from 64.4 billion yen in the same period a year earlier.
In the video-game division, sales of PlayStation 2 consoles tapered off and prices were slashed. Operating profit in the division sank 37 percent for the quarter to 44.6 billion yen ($433 million) from 70.5 billion yen.
The PlayStation Portable, or PSP, the handheld version of Sony's hit game machine, went on sale in Japan on Dec. 12 and is scheduled to go on sale in the United States and Europe later this year. Sony said it sold 510,000 PSP machines, a healthy number, so far but needs to boost production to keep up with demand.
Sony Pictures Entertainment provided one bit of bright news, where home entertainment revenue was led by "Spider-Man 2" and the TV show "Seinfeld."
DVD and video shipments for the two titles totaled 30 million, Sony said. Strong box office offerings included "The Grudge" and "Christmas with the Kranks," but "Spanglish" was a disappointment.
Operating profit in films for the quarter more than tripled to 18.6 billion yen ($180 million) from 5.6 billion yen the previous year, while sales jumped 12 percent.
Quarterly operating income at Sony's music unit plunged 26 percent to 12 billion yen ($116 million) from 16 billion yen. But the numbers aren't directly comparable with the previous year because of the establishment of Sony BMG in August, a joint venture with Bertelsmann AG, in which each owns a 50 percent stake.
Sony shares, which have gradually fallen to about half of what they were five years ago, fell 0.5 percent to 3,790 yen ($37) on the Tokyo Stock Exchange Thursday, before earnings were announced.
