Sony Posts First Profit Since 2008 on Asset Sales, Yen

Photographer: Kiyoshi Ota/Bloomberg

Selling properties and other investments have generated about $2 billion in profit for Sony as it tries to end seven straight years of losses from television production. Close

Selling properties and other investments have generated about $2 billion in profit for... Read More

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Photographer: Kiyoshi Ota/Bloomberg

Selling properties and other investments have generated about $2 billion in profit for Sony as it tries to end seven straight years of losses from television production.

Sony Corp. (6758), Japan’s biggest television maker, reported its first annual profit in five years after selling assets and benefiting from a weaker yen that boosted overseas revenue.

Net income was probably 40 billion yen ($403 million) in the year ended March 31, compared with a net loss of 456.7 billion yen a year earlier, the company said in a preliminary earnings statement yesterday. The average of 18 analyst estimates compiled by Bloomberg was 43.3 billion yen.

Selling properties and stock holdings generated about $2 billion in profit for Sony as it stumbles from losses in its TV business and mobile-phone unit. Games, cameras and mobile devices, including Xperia smartphones, are central to Chief Executive Officer Kazuo Hirai’s plan to revive the consumer- electronics business after losing ground to Apple Inc. and Samsung Electronics Co.

“Asset sales are one-time gains, and the challenge this year will be to generate as much profit from businesses,” said Hideki Yasuda, an analyst at Ace Securities Co. in Tokyo.

Sony rose 0.3 percent to 1,631 yen at the close of trade in Tokyo. Sony, which earlier projected net income of 20 billion yen for the last fiscal year, is up 70 percent this year, outperforming Japan’s benchmark Nikkei 225 Stock Average, which has added 34 percent.

Higher Profit

“The stock may react positively to the numbers but won’t probably continue rallying,” Hiroshi Shin, an analyst for Mitsubishi UFJ Morgan Stanley Securities Co., said in a report yesterday.

Operating profit, or sales minus the cost of goods sold and administrative expenses, was probably 230 billion yen in the year, compared with a year earlier operating loss of 67.3 billion yen and the company’s February forecast for earnings of 130 billion yen, Sony said yesterday.

Sales rose 4.7 percent to 6.8 trillion yen in the year, the company said. That’s higher than its earlier forecast of 6.6 trillion yen as a weaker yen boosted overseas earnings and higher stock prices helped Sony’s financial unit, it said.

“It’s hard to say Sony made a revival,” said Mitsuo Shimizu, a Tokyo-based analyst at Iwai Cosmo Holdings Inc. (8707) “We want to see how Sony will rebuild its main electronics business.”

In February, the maker of PlayStation game players predicted a 115 billion-yen gain from the sale of a stake in health-care data provider M3 Inc. (2413) While selling 6 percent of M3 to Deutsche Bank AG’s securities arm, most of the gain is coming from a revaluation of its remaining 49.8 percent holdings in M3, Sony said Feb. 21.

Manhattan Offices

The company expects a profit of $685 million from selling its 37-story Manhattan offices, as well as a 41 billion-yen gain from selling an office building in Tokyo’s Shinagawa ward, where the company is based.

Sony will sell its entire stake in social-game website operator DeNA Co., booking a 40.9 billion yen gain on the sale.

The company is set to disclose full earnings on May 9.

Hirai, who took over as CEO from Howard Stringer in April 2012, also agreed to sell a chemicals unit and a stake in a display-making venture. He wants to generate 70 percent of revenue and 85 percent of operating profit in Sony’s electronics from games, digital imaging and mobile devices by March 2015.

PlayStation Preview

The manufacturer is heading for a ninth straight annual loss at its TV-making unit amid slowing demand and rising competition. Sales of Xperia smartphones and tablets trail Apple’s iPhones and iPads as well as Samsung’s Galaxy devices.

In February, Sony previewed the PlayStation 4, which will go on sale for the year-end holiday season. The company’s first home console in seven years will make its debut amid an industry shift toward games played on smartphones and tablets.

Competitor Microsoft Corp. plans a May 21 “unveiling” related to its Xbox console.

Mobile games and those downloaded to computers are taking a bigger portion of sales at the expense of traditional gear. U.S. revenue from those titles rose 16 percent last year to $5.9 billion, according to Port Washington, N.Y.-based researcher NPD Group Inc.

The company’s credit rating was cut three levels to BB-, a non-investment grade, by Fitch Ratings in November. Slumping demand for TVs and weakened economic conditions at home and overseas will leave the company struggling to regain technological leadership, Fitch said at the time.

Sony raised 150 billion yen selling five-year convertible bonds in November, its first offering of similar securities since 2003. The Walkman inventor, which announced 10,000 job cuts, lost about 31 percent of its market value last year.

To contact the reporters on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net; Takashi Amano in Tokyo at tamano6@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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