Sony Swings to Quarterly Profit as Movie Unit Financials Improve
Conglomerate raises full-year earnings forecast
NEW YORK - Sony Corp. swung to a better-than-expected profit of $375 million for its latest quarter as the film unit reduced its loss compared to the year-ago period and the division housing the conglomerate's video game business continued a recent trend of improved profitability.
Sony's revenue of $20.88 billion was up only 4% amid unfavorable foreign exchange rates. Sony on Friday boosted its profit forecast for the full fiscal year by 17% amid the results, even though it lowered its revenue target slightly. The company has focused on improving its profitability by reducing costs in various businesses.
Sony's movie business managed to boost revenue 6% to $1.74 billion in what was its fiscal second quarter driven by such releases as Salt, Grown Ups, Resident Evil: Afterlife, The Karate Kid and The Other Guys and growth at the company's international channels. While the unit made a loss due to the marketing costs of the new releases, that loss narrowed to $58 million.
The unit that houses the games business swung from a year-ago loss to a profit of $84 million. Management said the games business posted its fourth consecutive quarterly profit.
Sony's music unit posted lower financials. "This decrease is primarily due to lower sales in the current quarter for Michael Jackson catalog product, which significantly benefited sales in the second quarter of the previous fiscal year," the company explained.
In a conference call with U.S. analysts Friday, Rob Wiesenthal, group executive, Sony Corp., and CFO of Sony Corp. of America, answered questions about the outlook for 3D films and Sony TV sets with the Google TV service, which offers TV and Web content.
"More and more studios are obviously planning what we call high quality 3D content, because it is clear that consumers will respond in force...opening their pocketbooks and their wallets for quality 3D content," Wiesenthal said.
Asked about Google TV sets, he said "there is upside here because for the first time Sony will be able to generate revenues from a consumer past the point of purchase for the television with not only content, but targeted marketing, sponsorship and other services and even casual gaming, which is something we have never been able to do with a television consumer before."
Asked about recent reports that broadcast networks are blocking access to content on their Web sites via Googles TV, Wiesenthal said: "The networks earn significant fees from the conventional distributors and it is incumbent on the content companies to find ways to monetize their content." He added that companies are exploring new models. "Everybody is experimenting and everyone is working really hard to come up with business models so all the participants can earn money, and consumers can get access to their content," he said.