Batteries batter conglom's quarter
Blame it on the batteries.
Contrasting B.O. perfs from “Talladega Nights” and “Zoom” led to very mixed results for Sony Pictures last quarter, while its parent conglom saw profits plunge 94% amid a laptop battery recall and problems in its vidgame unit.
Investors weren’t surprised by the news following an earnings warning last week, however, so Sony stock closed up 4% on Thursday.
Company estimated the bill for recall of faulty lithium-ion batteries for laptop computers will be $432.4 million, with the number of recalled units reaching 9.6 million.
“Had it not been for the recall costs, Sony would have reported a slight increase in operating profit in the July-September period compared with the previous year,” Sony chief financial officer Nobuyuki Oneda told reporters.
Boosted primarily by brisk sales for digital cameras, flat-panel TVs and notebook PCs, overall Sony revenue grew 8% to $15.7 billion.
Sony Pictures revenue was up 12% at $1.5 billion, which the company attributed partly to its releasing more films than a year ago and also to solid box office for “Talladega Nights: The Ballad of Ricky Bobby,” “Click” and “Monster House.”
Those were tempered, however, by B.O. bombs “All the King’s Men” and “Zoom” as well as higher marketing costs, and SPE’s operating loss widened from $56 million to $129 million.
DVD revenue also was down, though Sony is expecting big things from homevideo in the current quarter thanks to “The Da Vinci Code” and “Talladega Nights.”
Operating loss for SPE’s TV division increased due to higher costs for a number of new shows launched.
Sony’s vidgame unit was a major drag in the quarter due to slow sales for the PSP handheld console and major investments that the company is making in the PlayStation 3, which launches in the U.S. and Japan in three weeks.
While PlayStation 2 remains the top-selling console, sales were slower this year than last, and company cut prices as well.
As a result, vidgame revenue was down 21% at $1.4 billion. Operating income swung from a $70 million profit to a $369 million loss.
That was due mainly to research and development costs for the PS3, as combined profits from the PS2 and PSP remained roughly unchanged from last year.
Sony’s interest in MGM contributed a $24 million loss to the bottom line, down 43% from last year. Conglom reports 45% of the Lion’s profit or loss based on its common stock ownership, even though its equity stake is only 20%.
Conglom’s operating loss for the quarter was $177 million (operating profit had been $635 million a year earlier), while net income plummeted from $235 million to $14 million.
Perf for Sony BMG Music Entertainment, in which the conglom has a 50% stake, was roughly flat, as revenue increased 1% to $948 million and net loss fell 35% to $39 million.
In its earnings warning last week, Sony revised guidance for the fiscal year ending in March to predict a 10% boost in sales to $69.6 billion, while net income is expected to fall 35% to $676 billion.