Slow sales slash Sony profit
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PS2 sales are slower, making life a little tougher for Sony, which reports a 26 percent fall in profit
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TOKYO, Japan (Reuters) -- Sony Corp has reported a 26 percent drop in quarterly net profit due to slower PlayStation 2 sales and fewer hit movies.
It raised its profit forecast for the year by 10 percent thanks to a stronger euro.
Operating profit at the electronics and entertainment group fell 20 percent in October-December from a year earlier but still beat analysts' expectations, helped by buoyant game software sales plus strong demand for its DVD/hard-disk drive recorders and LCD projection TVs in the U.S. market.
Fund managers played down the better-than-expected showing after the close Wednesday, saying a recovery in market demand -- not Sony's brand strength -- deserved the credit.
Sony's quarterly earnings may compare poorly with the rising profits expected from rivals Sharp Corp and Panasonic maker Matsushita Electric Industrial Co Ltd, which have had success with their flat-panel TVs and DVD recorders.
"Most of the recovery is simply an improvement in overall market conditions that is helping all of Japan's electronics makers," said Akio Yoshino, general manager at SG Yamaichi Asset Management.
Sony's reputation in the consumer electronics industry was tarnished when it posted a surprise $1 billion loss for January-March last year, but expected strong holiday sales had prompted some analysts to upgrade its prospects in recent weeks.
For the full business year to March 31, Sony lifted its net profit estimate to 55 billion yen ($521 million) from 50 billion yen because a strong euro is helping profits denominated in yen.
It is assuming a euro rate of 135 yen for the three months to March 31 compared with an earlier assumed rate of 125, but it lowered its assumed dollar rate to 105 yen from 110.
Sony left unchanged its full-year operating profit forecast of 100 billion yen as it decided to lift its full-year restructuring charges to 150 billion yen from 140 billion yen.
It booked 47 percent of those charges in the nine months to December 31. The remaining 80 billion yen is expected to be booked in the current quarter.
Based on its full-year estimates, Sony expects a fourth-quarter operating loss of 108.7 billion yen on sales of 1.68 trillion yen, with Sony officials forecasting an operating loss from its game and electronics division.
Last year, it posted an operating loss of 116.5 billion yen on sales of 1.5 trillion yen from mounting inventory at its electronics division, which triggered a sharp sell-off in its shares in late April and came to be known as the "Sony shock."
Sony shares have rallied almost 60 percent since then.
For the latest quarter, Tokyo-based Sony posted an operating profit of 158.8 billion yen, down 20 percent year-on-year, versus analysts' consensus estimate of 130.5 billion yen and a record profit of 199.5 billion yen in the same period a year earlier.
In Japan, Sony now has a 35 percent share of the market for DVD recorders and 25 percent of the flat-panel TV market, he said.
On a net basis, quarterly profit fell 26 percent from a year earlier to 92.6 billion yen and sales rose 0.7 percent to a record 2.32 trillion yen.
"Just looking at these figures, there is nothing that comes in above or below expectations, so we can call these results neutral," said Koichi Hariya, an analyst at Mizuho Securities.
Shares in Sony closed down 0.23 percent at 4,320 yen on Wednesday before the earnings announcement, versus a 0.69 percent fall in the market's benchmark Nikkei average.(See Asia markets story)
Expectations of strong holiday sales had pushed Sony's share price up about 12 percent in the last three months, compared to a 5 percent rise in the electric machinery sub-index IELEC.
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Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
