Film, TVs lead charge at Sony

But games' red ink widens despite Q1 sales surge

Strong performances from its film and electronics units helped Sony more than double its profit in the fiscal first quarter, up 105% year-over-year, the company said Thursday.

Profit for the quarter rose to ¥66.5 billion ($554 million) on sales of ¥1.97 trillion ($16.4 billion), helped by a weak yen and a strong showing from its core electronics division, where its Bravia flat-panel television sets are selling well.

The worldwide theatrical success of "Spider-Man 3," which debuted here at the start of the quarter, combined with strong DVD sales of "Casino Royale" and "Stomp the Yard" to help Sony Pictures Entertainment turn a profit of ¥3.3 billion ($27.5 million), rebounding from a small loss a year ago.

Increased advertising revenue at several of SPE's international TV channels also boosted income.

Sony BMG Music Entertainment, the 50-50 joint venture with Germany's Bertelsmann, also moved into the black, contributing ¥1.2 billion ($10 million) in profit on revenue of $875 million.

Falling CD sales at the unit were offset by an increase in digital revenue as well as lower marketing, overhead and restructuring costs. The top sellers for the period included albums by Avril Lavigne, Kelly Clarkson and R. Kelly.

Losses at Sony's troubled games division, meanwhile, widened from ¥26.8 billion to ¥29.2 billion ($242 million) despite a 60% rise in sales to ¥196 billion ($1.6 billion).

The PlayStation 3 console and software, which account for most of the increased revenue, have not done as well as hoped and are being outsold by Nintendo's Wii by about 4-to-1. Sony reported that though production costs are being reduced, the company still loses a considerable amount on each unit, though it declined to say how much.

Sony is sticking to its previous forecast of 11 million PS3 units by the end of the fiscal year, even though it has sold just 710,000 of the Blu-ray Disc-enabled game machine worldwide in the quarter.

In response to a question about how Sony planned to achieve the seemingly ambitious sales target, CFO Nobuyuki Oneda said the recent price cut for the PS3 had given sales a boost and that there were plans to have 200 software titles available by March.

The $100 price cut on the 60GB PS3 reportedly has resulted in short-term sales spikes of 200% and more at several retailers, including Plus, a reduction in price of the PlayStation Portable in April has had a similar though less dramatic impact on sales of that hand-held game console.

Asked if sales of the PS3 had disappointed, Oneda said: "The figures are a little below what we'd expected. Well, I say a little, it's actually about half of what we'd hoped for."

Sony, though, still boasts the world's most popular game console, the older PS2. According the data from Nielsen, 68 million people played video games last month, with 42% of them playing the PS2.

In second place was the original Xbox from Microsoft (17%), then the Xbox 360 (8%), Nintendo's GameCube (4%), Wii (4%) and PS3 (1.5%).

Sony shares fell 1.8% on Thursday to $51.36 on the New York Stock Exchange.

Paul Bond in Los Angeles contributed to this report.