Sony Film Unit Posts a Provisional Profit Despite Hack
Last year's cyberattack is forecast to cost Sony Pictures Entertainment $15 million in damage repair and recovery.
Sony Corp. said Wednesday that provisional results for its Sony Pictures Entertainment (SPE) unit show a profit of $20 million (￥24.3 billion) for fiscal third quarter ended December, during which the studio's computer systems were hacked by a group calling themselves Guardians of Peace.
Sony Pictures saw a 90 percent fall in operating income compared to the same period in 2013 due to the hacking and lower theatrical revenue, according to the provisional earnings report. Its biggest box office hit during the quarter was Fury, which took more than $200 million worldwide.
Sales at Sony Pictures are predicted to fall 23 percent in dollar terms to $1.63 billion, but only 11.7 percent in yen, due to the weakening of the Japanese currency.
There were also fewer home entertainment releases in the last quarter, while the same period in 2013 benefited from the strong VOD revenues from Breaking Bad.
The quarter "is expected to include approximately $15 million (1.8 billion yen) in investigation and remediation costs" relating to the cyberattack, Sony said.
Sony faced questions from the media at its earnings forecast announcement in Tokyo about the effects of the cyberattack and its response to it.
"We don't think the leaking of unreleased films online or the damage to the IT systems will cause a significant loss. We had insurance against cyberattacks, and will be able to recover a significant portion of the costs, which will likely be be paid out in the next fiscal year [after April]," said Kazuhiko Takeda, vice president at the corporate planning and control dept.
"Cyber security is a world that is moving so fast everyday that complete protection is probably not possible. What we can do is work on all aspects of cyber security," said chief financial officer Kenichiro Yoshida in response to a question about whether Sony was adequately prepared for the risk of a cyberattack.
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Overall operating income at Sony Corp. is estimated to have doubled to $1.45 billion (￥178 billion) from the same quarter a year previously, boosted by the weak yen and stronger results across its divisions, except for SPE. On the back of the better performance, the company also cut its full-year loss forecast by more than 20 percent to $1.4 billion (￥170 billion).
However, the company will be unable to release final figures until the end of March due to the delays caused by the devastating cyberattack at the end of last year, Sony reiterated on Wednesday.
Sony Music posted operating income of $210 million, up 17 percent, from sales of $1.35 billion (￥163.6 billion), boosted by strong sales of albums from One Direction, AC/DC, Pink Floyd, Foo Fighters' and Garth Brooks. The music segment also benefited from the weak Japanese yen, with sales rising 13 percent in local currency, but only three percent in dollar terms.
Higher sales of smartphones boosted income from its Mobile Communications division by 46 percent to $76 million (￥9.3 billion) on sales of $3.55 billion (￥429 billion).
Sony stock closed up 2.5 percent in Tokyo before the provisional earnings announcement.