Sony Profits Surge for Quarter
Thursday October 28, 8:09 am ET
By Yuri Kageyama, AP Business Writer
Electronics and Entertainment Giant Sony Profits Surge for Quarter Despite Shrinking Sales
TOKYO (AP) -- Sony Corp., the Japanese electronics and entertainment giant. said Thursday that its profit jumped 61.6 percent in the latest quarter on improved profitability in its mobile phone joint venture and gains in its movie business, led by "Spider-Man 2."
It raised its earnings forecast for the full year while lowering its sales projection.
Tokyo-based Sony reported a net group profit of 53.2 billion yen ($500 million; euro 393 million) for the July-September period, up from 32.9 billion yen in the same period a year ago.
But sales dropped 5.3 percent for the period to 1.702 trillion yen ($16 billion), from 1.797 trillion yen a year ago, on falling revenue from the company's electronics, video game and music businesses.
Sony raised its profit outlook for the full year ending March 31, 2005, to 110 billion yen ($1 billion), up 24 percent from fiscal 2003, and above its July forecast of 100 billion yen ($940 million).
But it lowered its sales projection to 7.35 trillion yen ($69 billion), down 2 percent from the previous year. Sony had earlier forecast sales of 7.55 trillion yen ($71 billion).
Profits during the quarter were boosted by Sony's music business, which returned to profitability after suffering a loss in the same period last year.
Sony's film business also posted strong profits thanks to strong revenue from the films "Spider-Man 2," "Hellboy" and "13 Going on 30," while pay television benefited from the popularity of "Bad Boys II" and "S.W.A.T."
Meanwhile, Sony Ericsson Mobile Communications, the mobile phone joint venture in which Sony is a partner, contributed 6.1 billion yen ($57 million) in income.
Profits for the quarter would have been greater if not for the strong yen. The U.S. dollar was worth about 110 yen during the period, down from 118 yen a year ago. A weak dollar hurts exporters like Sony by slashing the value of overseas profits when converted into yen.
Sony also took a 18.8 billion yen ($177 million) charge for restructuring.
Despite the higher full-year profit outlook, Sony said it continues to see problems in the electronics business in the months ahead.
Declining sales of PlayStation 2 video-game machines -- as well as price cuts in Japan, the United States and Europe, and an outsourcing of their production to Chinese companies -- hurt results, according to Sony.
Sony's sales of flat-panel and liquid-crystal display televisions and digital cameras were solid, but cathode-ray tube TV sales were down and portable audio devices fared poorly due to intensifying competition, Sony said in a statement.
Operating income was 27.4 billion yen ($257 million) in contrast to a loss of 4.6 billion yen a year ago.
For the first fiscal half, Sony recorded profit of 76.47 billion yen ($719 million), more than double the 34.05 billion yen for the same period a year ago. Sales edged down 3 percent to 3.31 trillion yen ($31 billion) from 3.41 trillion yen.
In August, Sony Music Entertainment and BMG, the music unit of the German media conglomerate Bertelsmann AG, closed a deal to combine, bringing together one of the most lucrative catalogs in popular music.
Sony also has an agreement with four consortium partners to purchase Hollywood studio Metro-Goldwyn-Mayer Inc., or MGM, which has a library of 4,100 films, including "West Side Story," "Rocky" and "Rain Man."
Sony shares closed up 0.8 percent at 3,690 yen on the Tokyo Stock Exchange shortly before earnings were announced.
