Falling product prices, competish, phone recalls cited for losses
NEW YORK — As Sony’s U.S. arm dramatically downsizes its TV biz, giant Japanese parent Sony Corp. said Thursday it lost 13.2 billion yen ($111 million) in the latest quarter as a downturn at the giant electronics group more than offset surprisingly upbeat numbers in motion pictures and games.
Revenue rose 5.7% to $15 billion.
Electronics makes up 70% of the total, so when it sneezes, the rest of the company feels it. The unit’s sales were about flat at $11 billion, but it swung to a $209 million loss in the second quarter ended Sept. 30 from a profit a year ago.
Sony cited a host of ills, including falling product prices, heightened competition, mobile phone recalls and severance costs.
Sony Pictures Entertainment saw revenue jump 29% to $1.2 billion and pulled into the black, with operating profit of $186 million.
SPE exec VP and chief financial officer Bedi A. Singh attributed the upturn to several factors: theatrical releases, led by “America’s Sweethearts”; carryover DVD and video sales from prior-year pics, including “The Wedding Planner,” “Vertical Limit” and “Crouching Tiger, Hidden Dragon”; and initial syndication revenue from “Just Shoot Me.”
TV trims will help
Sony’s move to trim its TV production biz will likely prove a boon to SPE’s earnings going forward, Singh told Daily Variety. “Deficit financing looks better when you don’t have the deficits,” he said, “although you’re not getting the infusion of revenue either.”
He also said SPE, which houses Sony’s interest in Telemundo, will see a cash infusion when the sale of the Spanish-lingo net to NBC closes. SPE had been carrying a portion of Telemundo’s losses for several years, although the net was expected to break even in 2002.
Sony’s game division also swung to an operating profit of $34 million as sales surged 98% from the year before to just over $2 billion. Company cited lower production costs and higher sales of its flagship PlayStation 2 software.
Music losses widen
At Sony Music, sales rose 4.7% to $1.2 billion and operating losses widened to $44 million. Sony noted weak industry conditions worldwide, with a big hit after the Sept. 11 terrorist attacks, escalating digital piracy, restructuring costs and digital media investments. Bestsellers for the quarter included Macy Gray’s “The Id,” Jamiroquai’s “A Funk Odyssey” and Maxwell’s “Now.”
A weaker yen quarter to quarter penalized some divisions but helped Sony’s overall numbers. On a so-called constant currency basis, for instance, consolidated sales were down 2%, not up 6%.
Sony shares rose 1% to close at $40.43.