Studio posted a $59 million operating loss
Sony Pictures slid into the red last quarter as “Stealth” and other misfires came nowhere near matching Spidey’s perf the year before.Studio posted a $59 million operating loss. Revenue dropped 17% to $1.4 billion. Weak pics plus woes in the electronics biz knocked parent Sony Corp.’s net profit down by 47%. Total revenue was flat at about $15 billion for the three months ended in September — Howard Stringer’s first full quarter at the helm of the giant Japanese conglom. Stringer, a Welsh-born former CBS News producer, was named chairman-CEO last spring, replacing Noboyuki Idei. Board gave the formal nod to Sony’s first non-Japanese chief in June. Stringer’s been focused on reviving the moribund electronics biz, Sony’s largest division, which will be no picnic, the latest figures emphasize. Sales of traditional televisions and digital cameras continued to slip, more than offsetting a boost in flat-screen TVs and camcorders. Last month, Stringer announced 10,000 layoffs in electronics, about 6% of the worldwide workforce, and said a host of product lines would be discontinued. In presentations in Tokyo and New York, he promised skeptical analysts and investors that Sony’s moving aggressively to attack its problems –the result of fierce competition from more nimble rivals and of a lack of communication among and even within Sony’s divisions. Investors are still cautious about a turnaround. Sony shares slipped 1.7% to $31.82 — nearly 10 bucks below its 52-week high. Unfortunately for Stringer, the studio hasn’t provided much solace. While “Spider-Man 2” buoyed the box office last year, a string of recent pics such as “Bewitched,” “XXX: State of the Union” and “Stealth” have disappointed. The studio is understandably eager to unspool its fall lineup, which includes “The Legend of Zorro,” “Zathura,” “Memoirs of a Geisha” and “Fun With Dick and Jane.” (“Zorro” sequel is a co-production with Spyglass, “Geisha” with Spyglass and DreamWorks.) Next year, Sony will release “The Da Vinci Code” and the next James Bond pic, “Casino Royale.” “Spider-Man 3” is due in 2007. With a heavy lineup of fall pics on the pricey side, studio noted that marketing costs for upcoming theatrical releases were significantly higher last quarter than in the year-earlier period. A dearth of major syndication revenue also squeezed profits at the studio, Sony said. Conglom recorded a $39 million loss from its 20% stake in MGM, which it acquired last April for $4.8 billion in partnership with Comcast and a group of financial partners. It said the loss “is subject to adjustment reflecting the final allocation of the purchase price.” Sony also said its 50-50-music joint venture with Bertelsmann, Sony-BMG, lost about $60 million — with $29 million of red ink accruing to Sony. Company cited $43 million in Sony-BMG restructuring charges and “harsh market conditions in many territories worldwide,” notably the U.S., Germany, the U.K. and Australia. Sony’s overall operating income surged 52% to $583 million, but that was due to a massive one-time gain of $650 million. Gain was related to the transfer of a portion of Sony’s employee pension fund to the Japanese government. Most of the benefit ($565 million) flowed to electronics, which posted $153 million in operating income as a result. Without the one-time gain, electronics and the parent company would have posted operating losses. Revenue in electronics was nearly flat, easing 0.3% to $10.8 billion. Games were a bright spot. Thanks to PlayStation Portable and PlayStation 2, the unit swung to an operating profit of $73 million from a small loss the year before. Game sales surged nearly 80% to $1.9 billion.