Sony’s triple profit
Submitted by Gaming Briefs and Nostalgia Bits
TOKYO (AFP) - Japan’s Sony Corp. said Wednesday its annual net profit almost tripled to hit a record high as brisk sales of digital cameras and laptop computers offset continued losses from the PlayStation 3.
The electronics giant has endured a difficult past few years amid tough competition from rival products such as Apple’s iPod and Nintendo’s Wii, but is now enjoying a strong recovery under its first foreign boss, Howard Stringer.
Sony said its operating profit leapt more than fivefold, helped by asset sales, and is expected to rise further this year. But its bottom line is set to worsen due to a stronger yen and smaller one-off gains.
The games division narrowed its losses but remained stuck in the red as the PS3 faced tough competition from Nintendo’s Wii.
Net profit came to 369.44 billion yen (3.53 billion dollars) in the 12 months to March, up 192.4 percent from a year earlier, when Sony was forced to recall millions of faulty computer batteries.
Operating profit surged 421.9 percent to 374.48 billion yen, helped by the sale of property and semiconductor operations.
Revenue increased by 6.9 percent to an all-time high of 8.87 trillion yen.
“The results are not bad,” said Hirose Osamu, electronics analyst at Tokai Tokyo Research Centre.
“But compared to Nintendo, (Sony) has been lagging behind since the beginning. Investors would have liked to see Sony narrow its losses more” in the game division, he said.
The company’s game unit logged an operating loss of 124.5 billion yen compared with a loss of 232.3 billion a year earlier.
Sony has been seeking to shed non-core assets and revive its mainstay electronics business. It has axed thousands of jobs since Stringer, a Welsh-born US citizen, took over in 2005.
It said its fourth-quarter group operating loss shrank to 4.67 billion yen from 113.37 billion a year earlier.
For the current year to March, Sony forecast a 21.5 percent drop in net profit to 290 billion yen, partly due to a stronger yen and reduced gains from asset sales.
But it expects operating profit to increase by 20.2 percent to 450 billion yen as revenue goes up 1.4 percent to 9.0 trillion yen.
Sony chief financial officer Nobuyuki Oneda said profits from the core electronics division were expected to decline this year due to a stronger yen, which is bad for export earnings.
But he said the game division should return to profit “thanks to a reduction in the cost of PS3 hardware and an increase in the number of software titles.”
Sony introduced a cheaper, slimmed down version of the PS3 in Japan and the United States in November last year in an attempt to better compete with Nintendo’s more affordable and popular Wii.
Sony said it had sold 9.24 million PS3s in the year to March.
“Brisk sales are continuing this financial year,” Oneda told reporters.
The television division is expected to return to the black this year due to cost reductions, and the Blu-ray DVD business is expected to start making money in the second half as sales grow, he predicted.
Even so, said Shinsei Securities analyst Junko Miyakawa, it may not be easy for Sony to meet its operating profit target.
“It depends on how much the games division can recover and narrow its losses. I think it will be difficult to bring (the unit) into the black. Time has elapsed since the PS3’s launch and it is starting to lose its freshness.”
I still wonder how much longer ANY console builder can keep up their success rate - the PC will surely replace all that in another decade.
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