Sony likes future despite loss
EmptySony Corp. on Wednesday predicted record profit and revenue for its new fiscal year after recording its biggest loss in four years in its fiscal fourth quarter. Sony's film unit was the star performer in the electronics and entertainment giant's results for the quarter and full fiscal year.
American depository receipts of Sony closed up 6% on Wednesday at $55.85 after setting a 52-week high of $56.09 intraday.
Although still dogged by bad publicity and the financial fallout from the failure to get the PlayStation 3 console to market on time, Sony executives in Tokyo were able to point to positive figures from such films as "The Da Vinci Code," "Casino Royale," "Click" and "The Pursuit of Happyness."
For the new fiscal year, Sony forecast lower film revenue — partly because of fewer releases — and higher operating profitability.
Sony chairman and CEO Howard Stringer, who arrived in March 2005 with the task of rebuilding the ailing giant, did not attend the official earnings announcement but in a brief interview expressed his delight at the impressive showing of Sony's "Spider-Man 3" to date. "It hasn't done badly, has it," he said.
In its opening weekend, the third outing for the "Spider-Man" franchise earned an impressive $382 million worldwide.
"We're really focusing on a more concentrated film slate with fewer, more profitable films … the Revolution deal is winding down," said Robert Wiesenthal, group executive in charge of corporate development and M&A at Sony Corp. and executive vp and CFO at Sony Corp. of America, in a conference call with U.S. investors. "I won't call it a shift in strategy, but it's been more of an evolution where we are just much more efficient in terms of the greenlight process, more efficient in terms of marketing costs, and we are very optimistic in terms of profitability for the next year."
He added that the film unit targets a 10% margin and should reach that during the next two years.
Wiesenthal also said that "Spider-Man 3" would be at $650 million worldwide by the end of Wednesday and that it was an example of the new marketing realities in a digital world.
"The days of all the budgets being totally geared toward network primetime and double-truck Sunday newspaper ads are over," he said. "If you take a look at what happened for "Spider-Man," a lot of the drive was things like "Spider-Man 3" Week in New York and strong Web presence and a very strong mobile presence as well. So we are being much more efficient and much more targeted and smarter about how we spend our marketing dollars."
For the new fiscal year that ends in March 2008, Sony projects its overall profit to jump 153% from the ¥126.3 billion recorded last year to ¥320 billion ($2.7 billion).
Revenue in the latest year rose 10.5% to ¥8.30 trillion ($70.3 billion), with Sony projecting a 6% increase in the new fiscal year to a record ¥8.78 trillion.For the recently finished fiscal year, film revenue increased 29.5%, or 26% on a dollar basis, to ¥966.26 billion ($8.2 billion), with an operating profit of ¥42.71 billion ($362 million), a leap of 55.7% from the previous year.
Fiscal fourth-quarter film revenue jumped 19.1%, with operating profit up 9%.
But factoring in the impact of the somewhat slow PS3 start, Sony's overall fourth-quarter losses widened from ¥66.5 billion in the year-ago quarter to ¥67.6 billion ($583 million). Quarterly revenue jumped 12.6% to ¥2.09 trillion ($16.8 billion).
The company took a double body blow from the colossal costs associated with the launch of the much-hyped PS3 as well as the recall of 9.6 million batteries for laptop computers that were at risk of catching fire.
The figures were revealed by senior vp Takao Yuhara and chief financial officer Nobuyuki Oneda, who were quick to point to more optimistic figures for the current fiscal year, in which Sony expects to fare better in its video game sector and return its television division to profitability.
The PS3, meanwhile, was a drag on the company's latest set of financials. Fiscal full-year revenue rose 6.1% in the games unit, but it swung to ¥232.3 billion ($2.0 billion) loss compared with an ¥8.7 billion profit in the previous year.
In the fiscal fourth quarter, the games division saw an 84.6% revenue jump, but its operating loss also ballooned by more than 75% to ¥107.8 billion ($914 million).
As of the end of March, Sony had shipped 5.5 million PS3 units globally, failing to meet its target of 6 million consoles, but executives remained confident Wednesday.
"The product delays have now been resolved," Yuhara said. "We didn't have enough units for Japan and the U.S., so the launch was not ideal, but sales in Europe have been strong because we had enough units available there."
Georg Szalai in New York contributed to this report.