Sony Profit Declines 8.6% in Latest Quarter

The results at the conglomerate's film division dropped as 'The Social Network' went up against tough year-ago comparisons.

TOKYO – Sony Corp. on Thursday reported an 8.6 percent profit decline for its fiscal third quarter that ended Dec. 31 amid a slight drop in revenue, the effect of a strong yen and weaker quarterly results at the conglomerate's film unit, which faced tough year-ago comparisons.

Sony recorded a quarterly profit of $893 million. Operating profit fell 5.9 percent to $1.70 billion. Revenue came in 1.4 percent lower at $27.24 billion, or 2.2 trillion yen. However, in local currency terms, revenue grew 6 percent as the yen had appreciated 8.7 percent against the dollar and 18.5 percent against the euro over the year-ago period.

“If the effect of exchange rates is removed, operating profit would have risen more than 20 percent,” CFO Masaru Kato told a Tokyo press conference.

The Social Network was Sony Pictures’ biggest earner of the quarter, while theatrical revenue were hit by the weak performance of How Do You Know and tough comparisons. The same quarter in 2009 had seen strong sales from the releases of 2012 and Michael Jackson’ movie This Is It.

Operating profit in the film segment fell 66.7 percent to $58 million. Revenue at the division dropped 26.7 percent to $1.8 billion, which was also exacerbated by the weak dollar and poor home entertainment earnings. A continuing recovery in advertising revenue at Sony’s international TV channels made them a bright spot for the division though.

Revenue was down 14.5 percent to $1.72 billion in the music division and operating profit fell 15.7 percent to $241 million due to the continuing decline of the physical music market, only partially offset by increased digital downloads. Big-selling albums of the quarter included releases from Michael Jackson, Susan Boyle, Bruce Springsteen, Kings of Leon and two from the cast of Glee.

Meanwhile, Sony's networked products and services division, consisting of gaming and laptops, saw a big jump in profitability thanks to reduced costs in the game sector, despite a small drop in sales. The games business has now been profitable for five consecutive quarters.

“The reduction in manufacturing costs for PlayStation 3 hardware, as well as hit games such as Gran Turismo contributed to the division's income,” said Shiro Kambe, svp corporate communications, announcing that Sony was boosting its forecast for the division for the full fiscal year, which ends March 31. 

Sony's core consumer, professional & devices division, which accounts for nearly half of overall sales, saw a 47.2 percent drop in operating profit due to falling prices for LCD TV sales.

Despite the quarterly results being better than expected, Kato said Sony was taking a “conservative” view and not raising its overall full-year operating profit forecast.