Sony Announces More Losses And Forecasts Red Ink For The Year
Sony Pictures revenue up thanks to "Spider-Man" merchandising sale
TOKYO – Sony posted another quarter of red ink as losses widened to 27 billion yen ($350 million) for the three months to Sept. 30, on weaker LCD TV sales and a strengthening yen that continues to hurt earnings. The company is forecasting a full-year loss of $1.15 billion, after predicting a profit back in July.
While Sony Pictures was once again one of the few divisions to post positive numbers, with net income of $268 million, this was due to the sale of Spider-Man merchandising rights. The one-off sale netted $278 million – without which the division would have been in the red. Theatrical revenues were down on the same quarter last year, with The Smurfs being the only really big earner. The same period in 2010 saw the release of Salt, Grown Ups, Resident Evil: Afterlife, The Karate Kid and The Other Guys.
“Sony Pictures is a hit-driven business, and the division has invested in productions and been able to develop income from areas such as the merchandise from the Spider-Man franchise. That is something we can continue to exploit in the future,” said CFO Masaru Kato in response to a question about how the company intends to return to profitability.
Sales of the PlayStation 3 and PlayStation Portable grew for the quarter, but this was spurred largely by price cuts for both consoles, which ate into profits. The new portable console, the PlayStation Vita, is scheduled to hit shops in Japan by the end of the year, but will miss the holiday season in the US and Europe with a February release.
Turning around Sony’s TV business - which has been losing money for seven years - is the company’s priority, according to heir-apparent, Kaz Hirai. The division is predicted to make a $2.2 billion loss this financial year.
“I will take the lead in our efforts to make TV manufacturing profitable,” said Hirai. “But the market for LCD TVs has contracted, especially in developed countries. We’re now aiming for 20 million units a year, rather than 40 million; so we have to make ourselves profitable at that level of sales.”
With the Thai floods expected to cause considerable ongoing damage to its manufacturing and supply chain, Sony cut its full-year sales and profit forecast. The conglomerate is now predicting an annual loss of 90 billion yen ($1.15 billion) after forecasting a 60 billion profit four months ago.
Sony shares are down by almost 50% since the beginning of the year.