Sony Q1 Profit Triples On Digicam Sales

Posted: Jul 26 2007, 9:40am CDT | by , Updated: Aug 11 2010, 3:01am CDT, in News | I4U Network


Sony Q1 Profit triples on Digicam Sales
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By Kiyoshi Takenaka

TOKYO (Reuters) - Sony Corp. said its first-quarter profit more than trippled, beating expectations, after strong digital camera sales and a softer yen far outweighed losses on the struggling PlayStation 3 game console. Sony has been mounting a steady profit recovery on the back of expanding sales of key electronics products and a leaner cost structure after shutting factories and cutting thousands of jobs over the past few years.

But the company, in the final year of a three-year turnaround plan under Chief Executive Howard Stringer, has seen its PlayStation 3 outsold by rival Nintendo Co. Ltd.'s Wii console and its game division is mired in the red.

The electronics and entertainment conglomerate also faces tough price competition in the flat-screen TV market, and two factors that have boosted earnings -- the weaker yen and the stronger stock market -- could easily move the other way.

"The earnings came in way above expectations and the shares will react to that," said Masaki Iso, chief investment officer at Yasuda Asset Management. "But worries about its business do remain -- such as slide in prices for liquid crystal display TVs and a wider loss for its PlayStation."

Sony, which competes with Canon Inc. in the digital camera market and Samsung Electronics Co. Ltd. in LCD TVs, reported an operating profit of 99.32 billion yen ($825.6 million) in April-June, up from 27.05 billion a year earlier.

That was a record profit for Sony's fiscal first quarter.

The result easily beat a consensus forecast of 52 billion yen, according to four analysts polled by Reuters Estimates.

"They didn't have much in the way of new products during the quarter but they seem to have done quite well despite that. Overall, the results leave a good impression" said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

Besides the game unit, weak spots include its TV operations.

"We will have competitive lineup of TVs this fall ... But it seems quite tough to achieve a profit (in the TV business) for the year," Sony Chief Financial Officer Nobuyuki Oneda told reporters.

Sony stuck to its operating profit forecast of 440 billion yen for the year to March 2008, up sharply from 71.75 billion a year earlier, when it was hit by hefty costs for launching the PS3 and recalling PC batteries. The company forecast exceeds a consensus of 423.7 billion yen in a poll of 20 analysts.


Sony, locked in a three-way battle with Nintendo and Microsoft Corp. in the $30 billion video game market, cut the U.S. price of the PS3 by $100 this month. But even after the cut the PS3 is still twice as expensive as the Wii.

Sony's Oneda said, however, the price cut and forthcoming launch of an 80-gigabyte model would ignite demand.

"Thanks to these measures, PS3 sales are picking up pace," he said.

Sony said it sold 710,000 PS3 game consoles in the April-June quarter, less than a quarter of the 3.43 million Wii consoles sold by Nintendo in the same period.

Nintendo, which has recently overtaken Sony in market value, raised on Wednesday its sales target for the full year to March by 18 percent to 16.5 million units. Sony aims to sell 11 million units of the PS3 in the same period.

Operating profit in Sony's core electronics division jumped 77 percent in the quarter to 84 billion yen, while its financial unit's profit jumped seven-fold mainly because its life insurance arm posted gains on convertible bonds.

On a net basis, Sony's profit more than doubled to 66.46 billion yen on sales of 1.98 trillion yen, up 13.3 percent.

Its bottom line was buoyed by the robust performance at Sony Ericsson, the world's fourth-largest mobile phone maker owned by Sony and Sweden's Ericsson.

Ahead of the announcement, shares in Sony closed up 1.11 percent at 6,350 yen on expectations of strong results, outperforming the Tokyo stock market's electrical machinery index, which slid 1 percent.

(Additional reporting by Nathan Layne, Edwina Gibbs)
© Copyright 2007 Reuters.

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The Author

<a href="/latest_stories/all/all/2" rel="author">Luigi Lugmayr</a>
Luigi Lugmayr () is the founding chief Editor of I4U News and brings over 15 years experience in the technology field to the ever evolving and exciting world of gadgets. He started I4U News back in 2000 and evolved it into vibrant technology magazine.
Luigi can be contacted directly at




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