Electronic Sales Hit Sony Profit
Thursday July 24, 2:44 am ET
By Daisuke Wakabayashi
TOKYO (Reuters) - Consumer electronics giant Sony Corp. said on Thursday that group net profit tumbled 98 percent in the latest quarter, hurt by slumping sales for its Trinitron televisions and waning demand for PlayStation 2 game consoles.
Profit gains generated by its life insurance business could not offset weakness from the lack of a box-office blockbuster like last year's "Spider-Man" and falling sales of Vaio personal computers and stereo systems.
Sony is scrambling to rebuild its reputation after last year's shock fourth quarter loss, which prompted the company to unveil 300 billion yen in streamlining over three years to revamp its electronics business and improve profitability.
Sony said group net profit totaled 1.12 billion yen ($9.43 million), or 1.24 yen per share, for the April to June period versus last year's first quarter profit of 57.18 billion yen.
Revenues fell 6.9 percent to 1.60 trillion yen.
The results came in below expectations of seven industry analysts polled by Reuters journalists for a net profit of 6.2 billion yen on sales of 1.63 trillion yen.
Sony maintained its full-year consolidated earnings estimates of a net profit of 50 billion yen and an operating profit of 130 billion yen on sales of 7.4 trillion yen.
Operating profit fell 67.9 percent from a year earlier to 16.67 billion yen in the first quarter of the business year ending March 31, better than seven analysts' average expectations of 13.2 billion yen.
The games division, hitherto a driver for earnings growth, saw operating profit fall 31.6 percent in the first quarter from the same period a year earlier. Shipments of PS2 consoles fell 42 percent to 2.65 million units in April-June from a year ago.
Sony's financial businesses, including its online bank and life insurance company, saw an almost 30 percent jump in operating profit in the April to June period, helped by gains from investments. Sony, the world's largest consumer electronics maker, has seen profit margins slowly deteriorate in the face of price competition from Chinese and South Korean manufacturers, including Samsung Electronics Co. Ltd.
Samsung, often used as a comparison for Sony, said last week its April-June profit fell 41 percent on weak memory chip prices, but it still scored an operating margin of 11.8 percent versus just 1.0 percent for Sony in the first quarter. In the last three months, shares in Sony have recouped losses stemming from the earnings shock, which sent the shares down almost 25 percent in two trading days. But the shares have still fallen one percent in the last three months, compared to a 44 percent gain for rival Matsushita Electric Industrial Co. Ltd. and a 38 percent rise for Samsung during that period.
Sony is now worth about $29 billion, versus $28 billion for Matsushita and $55 billion for Samsung
Thursday July 24, 2:44 am ET
By Daisuke Wakabayashi
TOKYO (Reuters) - Consumer electronics giant Sony Corp. said on Thursday that group net profit tumbled 98 percent in the latest quarter, hurt by slumping sales for its Trinitron televisions and waning demand for PlayStation 2 game consoles.
Profit gains generated by its life insurance business could not offset weakness from the lack of a box-office blockbuster like last year's "Spider-Man" and falling sales of Vaio personal computers and stereo systems.
Sony is scrambling to rebuild its reputation after last year's shock fourth quarter loss, which prompted the company to unveil 300 billion yen in streamlining over three years to revamp its electronics business and improve profitability.
Sony said group net profit totaled 1.12 billion yen ($9.43 million), or 1.24 yen per share, for the April to June period versus last year's first quarter profit of 57.18 billion yen.
Revenues fell 6.9 percent to 1.60 trillion yen.
The results came in below expectations of seven industry analysts polled by Reuters journalists for a net profit of 6.2 billion yen on sales of 1.63 trillion yen.
Sony maintained its full-year consolidated earnings estimates of a net profit of 50 billion yen and an operating profit of 130 billion yen on sales of 7.4 trillion yen.
Operating profit fell 67.9 percent from a year earlier to 16.67 billion yen in the first quarter of the business year ending March 31, better than seven analysts' average expectations of 13.2 billion yen.
The games division, hitherto a driver for earnings growth, saw operating profit fall 31.6 percent in the first quarter from the same period a year earlier. Shipments of PS2 consoles fell 42 percent to 2.65 million units in April-June from a year ago.
Sony's financial businesses, including its online bank and life insurance company, saw an almost 30 percent jump in operating profit in the April to June period, helped by gains from investments. Sony, the world's largest consumer electronics maker, has seen profit margins slowly deteriorate in the face of price competition from Chinese and South Korean manufacturers, including Samsung Electronics Co. Ltd.
Samsung, often used as a comparison for Sony, said last week its April-June profit fell 41 percent on weak memory chip prices, but it still scored an operating margin of 11.8 percent versus just 1.0 percent for Sony in the first quarter. In the last three months, shares in Sony have recouped losses stemming from the earnings shock, which sent the shares down almost 25 percent in two trading days. But the shares have still fallen one percent in the last three months, compared to a 44 percent gain for rival Matsushita Electric Industrial Co. Ltd. and a 38 percent rise for Samsung during that period.
Sony is now worth about $29 billion, versus $28 billion for Matsushita and $55 billion for Samsung
