Sony reports second quarter profit increase; write-down in gaming

Thursday 25th October 2007, 09:09:00 PM, written by Carl Bender

Sony has announced earnings of ~$645.5 million (73.7 billion yen) for the quarter ended September 30th, an over forty-fold increase from the year ago period. The appearance of the dramatic increase stems primarily from the artificially depressed numbers of the 2006 period, which saw Sony take a 51.2 billion yen charge associated with the recall of lithium-ion laptop batteries. Profit drivers in the present quarter included a resurgent electronics division, led by an increase in Bravia LCD, VAIO PC, and Cyber-shot camera sales. Revenues in the electronics division rose by 20% over 2006 numbers, with operating income of ~$938 million recorded.

In other divisions, Sony Pictures saw a swing to profit vs the year-ago period, recording ~$23 million based in part on the strength of Superbad at the box office. Sony Financial Services saw a slight net income decline of 6% to ~$201 million; in the third quarter, Sony will record an extraordinary gain associated with the October 11th IPO of the unit. Joint-venture Sony-Ericsson contributed ~$183 million for the quarter to Sony's bottom line; operations at Sony-BMG resulted in a ~$4 million loss to Sony.

Gaming saw losses for the quarter expand to ~$841 million, more than doubling the year-ago period.  The primary catalyst were write-down charges of ~$623 million associated with PS3 price drop announcements back in July, and most recently again in October.  During the conference call, Sony indicated that although manufacturing expenses were reduced on the new 40GB unit, this now primary PS3 variant would continue to be a loss-leading product for the immediate future.  Sony felt optimistic, however, that the losses for the remaining two quarters would be minimal relative to the first half, and that profitability would be regained sometime during fiscal 2009 (calendar 2008).

Unit sales for PS3 totaled 1.31 million for the quarter, with Sony maintaining their fiscal year-end target of 11 million consoles on the assumption that increased software offerings and cheaper hardware will increase the rate of sales going forward. For their part, PS2 and PSP sales exceeded expectations, at 3.28 million and 2.58 million units sold during the quarter, respectively. Software sales for the patforms came to ~38 million (PS2), ~12.6 million (PSP), and ~10.3 million (PS3).

Of note, Sony spoke to the upcoming deal with Toshiba as one that would see them collaborate going forward on 45nm and beyond, while relieving them of the upfront capital expenditure costs associated with new fab build-out. Sony hopes that volume synergies achieved in conjunction with Toshiba's own requirements will lead to unit pricing similar to that derived from internal operation. Sony plans to redirect cap-ex from advanced LSI towards further strengthening their leadership positions in CMOS sensors and OLED displays.

Discuss on the forums

±

Diving into Anti-Aliasing
RWT explores Haswell's eDRAM for graphics
ATI shoots a Bolt through its GPU compute stack
AMD releases CodeXL 1.0
Travelling in Style: Beyond3D's C++ AMP contest
Analysis of Ivy Bridge Graphics Architecture at RWT
RWT analyzes Kepler's architecture
Nvidia 680 GTX (Kepler) Released
Microsoft Releases C++ AMP Open Specification
Nvidia's 2x Guaranteed Program