Film unit fuels Sony's fiscal second quarter
EmptyTOKYO -- Sony turned in a strong fiscal second-quarter financial report Thursday, as the conglomerate's bottom line got a boost from its Hollywood studio, which swung to a profit thanks to such hits as "Superbad" and "Spider-Man 3," as well as the continued turnaround in its electronics division.
Based on the better-than-expected figures, the entertainment and electronics giant raised its fiscal full-year guidance.
However, its video game unit continues to post losses, and Sony confirmed that it will miss earlier sales targets for the PlayStation 3.
Overall, it was good news for a company that has recently been making headlines for the wrong reasons, including a recall of faulty battery packs for laptop computers and delays in the launch of the PS3 console.
American depository shares of Sony rose 6% to $47.98, making it Thursday's biggest gainer on The Hollywood Reporter Showbiz 50 stock index.
Sony's profit for the quarter ending Sept. 30 multiplied from 1.7 billion yen a year ago to 73.7 billion yen ($641 million). Its revenue jumped 12.3% to 2.08 trillion yen ($18.1 billion).
In the pictures division, revenue increased 6.4% thanks to higher sales of theatrically released and telefilms as well as higher advertising and subscription revenue from several of Sony Pictures Entertainment's international channels.
The film division reported 2.7 billion yen ($23 million) in operating income for the quarter, compared with a 15.3 billion yen ($134.8 million) loss a year ago, with teen comedy "Superbad" contributing the most at the boxoffice.
The company's bottom line also was boosted by sales of digital cameras, camcorders, LCD televisions and other consumer electronics products, but the PS3 is still causing the company headaches, CFO Nobuyuko Oneda said.
Sony's video games division reported its seventh straight quarterly loss despite a 43% increase in revenue.
"Segment losses increased primarily due to the loss arising from the strategic pricing of PS3 at points lower than its production cost, as well as an increase in write-downs of PS3-related inventory," Oneda said.
He was quick to point out, however, that revenue had exceeded the company's expectations and picked up in the preceding two weeks in Europe, the first territory to benefit from the release of new models of the platform and a revised pricing structure.
Nonetheless, he confirmed that the company now expects to miss its target of selling 11 million PS3 consoles this fiscal year.
Analysts said Sony is suffering from a lack of available software, but Oneda said it would be wrong to characterize game designers as "abandoning" the PS3 for rival systems. Instead, he said, they are designing games across multiple platforms.
Meanwhile on Thursday, Japanese gaming competitor Nintendo for the fiscal second quarter ending Sept. 30 reported a profit of 52.2 billion yen, up from 38.8 billion yen a year ago thanks to the success of the Wii console. Revenue rose from 167.9 billion yen to 354.36 billion yen. Nintendo said it sold 7.3 million Wii players in the first half of its fiscal year. The strong figures led it to boost its fiscal full-year profit forecast for the second time.
Sony's electronics business leapt to 106.9 billion yen ($941.9 million) in the quarter from 8 billion yen ($70.5 million) a year ago, though that figure was skewed by the 51 billion yen ($449.3 million) required to recall laptop computer batteries. Revenue rose 20.7%.
Finally, Sony recorded equity in loss of $4 million for the Sony BMG music joint venture, which brought in a 10% revenue decline to $851 million. The company cited "the continuing decline in the worldwide physical music market, as well as fewer major artist releases."
Best-selling albums in the three-month period included Bruce Springsteen's "Magic," Foo Fighters' "Echoes, Silence, Patience & Grace" and Kenny Chesney's "I Am: Poets & Pirates."
Oneda was optimistic about the future of the alliance, pointing out that the European Commission this month completed a re-examination of the merger of the two companies and said that it was standing by its 2004 decision, which ruled that it did not pose a threat to competition in the market.
Buoyed by the good figures, Sony is now forecasting an operating profit of 450 billion yen for the fiscal year ending in March, up from 440 billion yen.
Georg Szalai in New York contributed to this report.