Sony Lifts First Quarter Profits, But Estimates $488 Million Loss for Year

TOKYO — Troubled electronics giant Sony has flummoxed nay-saying analysts with a rise in six-fold increase in net income in the three months to June of JPY26.8 billion ($261 million).

For the April-June period total sales advanced by 6% to $17.9 billion and the company also recorded a JPY34.3 billion operating profit rise year-on-year, to 69.8 billion yen ($691 million). which it attributed to stronger earnings in the Games & Network Services division.

But the Japanese giant said that it continued to forecast a net loss of JPY50 billion ($488 million) for the full year.

Sony has been aggressively restructuring, selling off its Vaio PC business, hiving off its loss-making TV division into a separate, wholly owned company and unloading company real estate.

The ‘pictures division,’ which Sony has been under pressure to sell and where there has recently been a spate of high profile executive exits, recorded an operating profit of JPY7.8 billion ($76 million), more than double the 3.7 billion yen ($36 million) reported in the first quarter of FY2013. Sony cited the strong worldwide gross of “The Amazing Spider-Man 2” and “22 Jump Street” and said the result was flattered by comparison with a quarter which included the theatrical under-performance of “After Earth.”

The Games & Network Services segment squeezed out an operating profit of JPY4.3 billion ($42 million), an improvement compared with the JPY16.4 billion ($159 million) loss recorded in Q1 of last year. Strong sales of PlayStation 4 consoles, as well as rising revenues from game-related network sales nearly doubled sales year-on to JPY258 billion ($2.5 billion).

The key Home Entertainment & Sound segment, which includes television set manufacturing, reported a gain in operating profit, from JPY3.4 billion ($33 million) to JPY7.7 billion ($75 million) year-on. Interest in World Cup soccer games helped boost TV sales 10% year-on to JPY205 billion ($2.03 billion).

The Mobile Communications division, which has been targeted as a future profit center, ended the quarter with an operating loss of JPY2.7 billion ($26 million), down from a profit of JPY12.6 billion ($122 million) the previous first quarter. Sony blamed the slide on higher marketing and R&D expenses, as well as other factors.

In May Sony predicted that it would earn $254 million from sales of 50 million smartphones in the current fiscal year, compared with sales of $39.1 million in FY 2013. It now sees a slippage in annual sales, especially in emerging markets, however, and operating profit for the segment is expected to total zero.

Currency movements also boosted the group’s top revenue line by 3% when expressed in Japanese Yen.

For the full year the group left unchanged its forecast for the pictures division at revenues of JPY880 billion (US$8.6 billion), with operating income of JPY65 billion (US$635 million). In 2013-2014 the division delivered revenues of JPY830 billion and income of JPY51.6 billion.

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