Sony Raises Full-Year Profit Forecast, Citing Demand for Games, Computers
Sony Raises Profit Forecast on Games, Computers
Ramin Talaie/Bloomberg
Sony fell 1.4 percent to close at 2,690 yen in Tokyo before the earnings announcement. The company has gained 0.8 percent this year, compared with the 13 percent drop for the Nikkei index.
Sony fell 1.4 percent to close at 2,690 yen in Tokyo before the earnings announcement. The company has gained 0.8 percent this year, compared with the 13 percent drop for the Nikkei index. Photographer: Ramin Talaie/Bloomberg
Sony Corp., Japan’s biggest exporter of consumer electronics, raised its full-year profit forecast 17 percent, citing improved earnings at its games and personal- computer businesses.
Net income in the year ending March 31 will be 70 billion yen ($868 million), compared with a previous projection of 60 billion yen, Sony said in a statement today. The company cut its full-year sales forecast to 7.4 trillion yen from 7.6 trillion yen, citing the stronger Japanese currency.
Computer sales rose and the cost of building PlayStation 3 game consoles fell, helping Sony deliver second-quarter earnings that exceeded analysts’ estimates. Still, the maker of Bravia TVs said it’s cautious in its outlook for the main electronics business because of a deteriorating TV market in North America, echoing concerns voiced by South Korea’s Samsung Electronics Co.
“It looks like everything other than TVs did surprisingly well, but television inventories are a worry,” said Hidehiro Tomioka, who helps manage $1.4 billion in Tokyo at MFC Global Investment Management (Japan) Ltd. “It’s hard to tell where growth will come from in the future. They’ve got Samsung to contend with, and the yen as well.”
Sony fell 1.4 percent to 2,690 yen at the 3 p.m. close in Tokyo trading before the announcement. The company has gained 0.8 percent this year, compared with a 13 percent drop for Japan’s Nikkei 225 Stock Average, a 6.8 percent decline for Samsung and an 18 percent slump for LG Electronics Inc. in Seoul.
Profit Beats Estimate
Second-quarter net income totaled 31.1 billion yen, beating the 11.1 billion yen average of five analyst estimates compiled by Bloomberg. A year earlier, it had a loss of 26.3 billion yen.
Income at the Consumer Professional & Devices group, the division that makes TVs, Cyber-shot cameras and semiconductors and is Sony’s biggest by revenue, more than doubled to 16.9 billion yen, missing analyst estimates for 22 billion yen. The company has cut its forecast for the segment’s full-year profit from its July projection, Sony said without elaborating.
The Networked Products & Services group, which handles PlayStation games, VAIO computers and Walkman media players, posted profit of 6.9 billion yen in the quarter, compared with a 59 billion yen loss a year earlier. Analysts had estimated a loss of 12 billion yen.
Operating results for this segment are likely to exceed the July forecast, Sony said in the statement, without providing a specific figure.
Greater Inventory
Inventory at the two divisions rose 7.4 percent from a year earlier to 819.9 billion yen. Compared with the April-to-June quarter, the stock increased 25 percent.
Second-quarter losses at the film unit totaled 4.8 billion yen, worse than analyst estimates for a 2.8 billion yen loss. Operating income at Sony’s music unit declined to 8.1 billion yen, while that at the financial services segment jumped 31 percent to 43 billion yen.
Sony maintained its target to sell 15 million PS3 machines, about 196 million game titles and 8.8 million personal computers.
The company revised its assumptions for the yen exchange rate to the dollar to 83 yen for the six months from Oct. 1, from 90 yen projected three months ago. The company kept its assumption for the euro at 110 yen.
Japan’s largest exporter of TV loses about 7 billion yen of annual operating profit for every 1 yen decline in the value of the euro and 2 billion yen for every 1 yen the dollar weakens.
Yen Appreciation
The yen gained 17 percent against the euro and 11 percent against the dollar in the first nine months of 2010, the best performer among 17 major currencies tracked by Bloomberg. A stronger yen damps the value of overseas earnings at Japanese exporters when repatriated.
Earlier this month, Sony started offering Internet-enabled TVs in the U.S. that use Google Inc. software to let viewers access websites and Web videos. The company is considering offering a 3-D version of the web-connected set. Sales of 3-D sets will probably account for about 10 percent of Sony’s total volume this fiscal year, it said in March.
The TV industry “is heading towards harsh competition in terms of marketing and prices,” Chief Financial Officer Masaru Kato said at a briefing in Tokyo. “It’s looking difficult to bring the TV operations profitable this fiscal year.”
To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net.
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net.
Rate this Page