Sony: Profit Pumped Up

Sony sprung back to profit last quarter and presented its full-year earnings forecast, fuelled by higher demand for its PlayStation 3 gaming consoles, personal computers and televisions.

The Tokyo-based electronics and entertainment giant said, “it booked a net profit of 25.7 billion yen — or $294 million at current exchange rates — for the April-June quarter.” This actually was a sharp turnaround from a 37.1 billion yen loss last year. Revenue grew 3.8 percent to 1.66 trillion yen.

Healthier performance in the electronics business stemmed mainly from consumers in emerging markets such as Asia and South America, which offset weakness in Japan and the United States.

The vertical, Sony entertainment vertical brought in significant outcome despite lower movie revenue, for which, Sony blamed the decline on the absence of megahits like "Angels & Demons" and "Terminator Salvation.", which it catered in the last year. In contrast to the films, the sales in music rose with certain popular tracks.
Since 2005, the Chief Executive, Howard Stringer has been trying to unite the company's sprawling businesses, improve efficiency and rein in costs. Sony cut costs by more than 330 billion yen last year, while procurement costs declined by almost one-fifth.

With certain significant moves like partnering with Google Inc., Intel Corp. and Logitech International to offer Internet TVs and the launch of new products like the 3-D model from the maker of Bravia liquid crystal display TVs pumped up the sales figure.

Although Sony needs to continue restructuring, the seeds of growth planted last year are beginning to sprout, said Masaru Kato, Sony's new chief financial officer. "We do have good products and good momentum, and we want to build on this so that our business keeps improving," Kato said.

The company sold 5.1 million LCD TVs during the quarter, up 59 percent from last year. Sales of PlayStation 3 sales more than doubled to 2.4 million units.
Sony upgraded its forecast for the full year through March 2011 where it expects a net profit of 60 billion yen, up from its previous estimate of 50 billion yen. The revenue projection remains unchanged at 7.6 trillion yen.

During the three months through June 30, the Japanese currency averaged 91 yen to the dollar and 115.5 yen to the euro, higher than the previous year, Sony said. Operating profit took a 13.8 billion yen hit as a result. Operating profit, which is considered as an indicator of actual business performance was 67 billion yen for the quarter compared to an operating loss of 25.7 billion yen in the same period last year. In trading Thursday, Sony shares inched up 0.1 percent to 2,611 yen on the Tokyo Stock Exchange.