Sony reported a sharp drop in profits and trimmed its full-year outlook in a downbeat earnings report Tuesday.
Net profit for the fiscal first quarter plunged 47.4% to $325.2 million, while operating profit declined 39% to $683 million. Profit dip was the first for the company in five quarters.
Sony Pictures was one of the conglom’s weak spots. Studio reported a 31% year-on-year drop in sales to $1.5 billion, while operating profit also plummeted $78 million into minus territory.
Sony reduced its net profit forecast for fiscal 2008, which ends in March 2009, going from a May figure of $2.69 billion down to $2.23 billion. It has also dialed back its operating profit outlook from $4.83 billion in May to $4.37 billion, citing a tough environment for electronics sales, off-setting a depreciating yen.
For Sony Pictures, timing was a key factor in the year-on-year comparisons. Studio had “Spider-Man 3” in May 2007, which gave the bottom line a huge boost in the same quarter last year. This year’s big summer tentpole was “Hancock” over the July Fourth weekend, so higher costs for P&A were not offset by revenue as in recent quarters. The Will Smith starrer just passed $500 million at the worldwide B.O.
Execs said the studio was still on track to deliver strong numbers overall. Exec VP-chief financial officer Robert Wiesenthal said no special accounting measures were taken to address the release disparity.
“The losses that you see in Q1, again, you have to look at the pictures business holistically over the course of the year,” Wiesenthal said during a conference call with analysts.
On the TV side, the company pointed to a silver lining in higher international ad revenue.
Meanwhile, Sony’s vidgame division reported a 16.8% year-on-year climb in sales to $2.14 billion, boosted by big gains in worldwide PlayStation Portable and PlayStation 3 hardware and software sales. Sony sold 3.72 million PSPs, up 1.59 million over the same period the previous year, and 1.56 million PS3s, up 860,000 and more than double the 700,000 total of a year earlier.
PSP software moved 11.8 million units for a gain of 2 million, and PS3 software, 22.3 million units — or a stupendous 18.1 million improvement over the same period last year.
The PlayStation 2 continued its slow slide into oblivion, with hardware sales down 1.15 million units to 1.51 million and software sales decreasing 11.8 million units to 19.3 million.
The stronger performance of the PS3 business, caused by cost reductions and brisker hardware and software sales, contributed to the perf of the game division, which swung to an operating profit to $50.2 million from an operating loss of $272 million in the same quarter last year.
A strengthening yen, losses at mobile phone co-venture Sony Ericsson, sharper competition for its Cyber-shot digital cameras and Handy-cam video cameras and price cuts on Sony’s Vaio PCs all sliced into profitability.
Consolidated sales inched up 0.1% to $18.4 billion, with the help of increased sales for Bravia LCD sets. On a local currency basis, however, the rise was 8%.
The news dented the conglom’s shares on the New York Stock Exchange. They slid 6.2% to $37.44 on a day when the Dow jumped 266-plus points thanks to upbeat consumer confidence data.