Weak film slate hammers Sony's Q1
Posts April-June net income of $330 mil, down 47.4%NEW YORK -- Sony's fiscal first-quarter profit was cut nearly in half, weighed down by weaker results from its film unit, which last year was buoyed by "Spider-Man 3," its electronics division and a strong yen.
Sony's games division, meanwhile, swung to a profit. A senior executive Tuesday touted the possibilities of the firm's music business at a time when many gaming and TV hits are music-driven.
In a conference call, Sony Corp. of America CFO Robert Wiesenthal also reported a "fairly good take-up rate" for the recently launched movie and TV download service for the PlayStation 3 and PlayStation Portable. He said that early results show stronger sales than rentals momentum.
Sony reported a profit of 35 billion yen ($330 million) for the April 1-June 30 period, a drop of 47.4% from a year ago. It lowered its profit forecast for the full year based on the results.
Sales at Sony Pictures were down nearly a third because of the lack of major theatrical releases beyond "You Don't Mess With the Zohan." The division lost $77 million, its first loss in seven quarters and below the $43 million year-ago profit when "Spider-Man 3" boosted results. Management lauded the strong performance of this year's tentpole release "Hancock," which opened at the start of this quarter, and said it is focused on the film unit's performance over the whole fiscal year.
One bright spot was Sony's gaming division, which moved back into the black, posting a profit of ¥5.4 billion ($51 million) thanks to lower manufacturing costs and higher sales for the PS3. The PS3 and PSP both saw growth of about 50% in hardware sales, and the PS3 finally outsold the PS2.
Music joint venture Sony BMG recorded a $42 million loss for Sony as physical sales fell faster than music downloads increased. A year ago, the unit posted a profit of $31 million.
"We're still cautiously optimistic," Wiesenthal said Tuesday when asked about a possible SAG strike. Sony is prepared for a possible work stoppage, but continues production as best as possible, he said.
Wiesenthal declined comment on reports that Sony could snap up the other 50% in Sony BMG held by German media giant Bertelsmann. But he did highlight the importance of music for the success of TV and gaming hits, such as "American Idol" and "Guitar Hero."
"We see music driving value everywhere," he said, adding Sony is looking for a deeper integration of music content with its devices in the future. He also predicted that 25% of music revenue would come from digital this year.
Wiesenthal also was bullish on Blu-ray Disc sales trends, saying the next-generation format made up 8% of DVD sales during the first half, compared with 2% a year ago. He added that, for some new releases, Blu-ray gets a 15% share.
Gavin J. Blair reported from Tokyo; Georg Szalai reported from New York.