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Sony Corp.’s Sony Pictures unit recorded a $920 million (106.8 billion yen) loss for the October-to-December quarter, following a goodwill impairment charge announced earlier this week, the company said in Tokyo on Thursday.
The film division recorded a profit of $179 million in the same quarter of the previous year, driven by the success of Spectre.
Revenue at the film division fell to $1.94 billion (225 billion yen) for the fiscal third quarter, compared to $2.18 billion in the same quarter of the previous year. Revenue was hit by a series of box-office underperformers, including Passengers and The Magnificent Seven.
Sony’s full fiscal-year forecast for operating income at the pictures division was revised to a loss of $737 million (83 billion yen), from a forecast of $258 million in November, due to the impairment charge.
On Monday, Sony announced it was taking a non-cash goodwill impairment charge of $962 million (112.1 billion yen) for its film division “as a result of revising the future profitability projection for the pictures segment.”
“The majority of the goodwill that was impaired was originally recorded at the time of the acquisition of Columbia Pictures Entertainment Inc. in 1989,” the company added in a note from CEO Kaz Hirai.
“Beginning this month, president Hirai will keep a second office in Culver City to become more deeply involved in the movie business, though his top priority will be to find a successor to Michael Lynton,” said chief financial officer Kenichiro Yoshida at a briefing for investors at Sony’s Tokyo headquarters after the results announcement.
Asked about what type of person Sony is looking for to lead its entertainment division, Yoshida answered, “Someone with experience and insight into picture production, but also, with the way that distribution is changing, a person who understands that technology, and has leadership.”
Yoshida reiterated Sony’s commitment to the movie business, which has been the subject of fresh sale speculation again since the impairment charge was announced, saying, “We plan to leverage IP from games for Sony Pictures Entertainment, something we can only do because we have both games and movie divisions.”
Overall sales at Sony Corp. were almost unchanged at $20.67 billion in dollar terms, but the appreciation of the yen reduced the value of this by 7 percent to 2.4 trillion yen. Operating profit fell by more than half, to $796 million for the quarter, due to currency and poor results in the mobile phone division.
Games continue to be a bright spot for Sony, with strong sales of the PlayStation 4 (PS4) software and PlayStation VR hardware, offset by a price cut for the PS4 and the stronger yen. Revenue rose 5 percent to $5.33 billion and profit jumped 25 percent to $431 million.
Music revenue rose 4 percent on a local currency basis, but fell 1.8 percent in yen terms, registering $1.54 billion (178.5 billion yen), with strong sales of Pentatonix’s A Pentatonix Christmas, and Leonard Cohen’s You Want It Darker albums. Profit grew 2.4 percent to $241 million (28 billion yen). Sony raised its full-year profit forecast for the division by nearly 10 percent to 69 billion yen, or $610 million.
Sony cut its full-year group operating income forecast by more than 10 percent to 240 billion yen, or $2.13 billion at current rates.
Sony Corp.’s stock closed down 1 percent at ?3,369 ($30.00) in Tokyo when the markets closed just before the earnings results were announced. The stock is up around a third over the last year.
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