Sony reports third quarter earnings, gaming turns profit
Friday 01st February 2008, 10:10:00 PM, written by Carl Bender
Sony yesterday released earnings for the fiscal third quarter ended December 31st, announcing net income of ~$1.76 billion (200 billion yen) on revenues of ~$25 billion (2.86 trillion yen); an increase of twenty-five percent in net compared to the year-ago period.
The core electronics business continued its recovery to post operating income of ~$1.46 billion (166 billion yen) on record revenues of over $18 billion. Leading the division in profitability were sales of Cyber-Shot cameras, VAIO PCs, disc manufacturing, and professional/broadcast equipment. Although sales of Bravia LCD televisions were also strong, rear-projection sets and lower margins on LCD proved a drag on TV earnings; Sony has committed to phase out its rear-projection operations in order to focus on LCD and development of OLED.
Sony Pictures saw a 49-percent drop in operating income stemming primarily from the lack of a blockbuster movie releases in the third quarter. DVD releases of both Spider-Man 3 and Superbad did well, however, and the unit earned ~$116 million. Sony Financial Services, spun off earlier in the year via an IPO (Sony maintains a 60% interest), will continue to be considered within the consolidated earnings. For the quarter, financial services posted a loss of ~$37 million based on revenue declines and asset valuations.
Across Sony's joint ventures, equity in net income of ~$446 million (46.9 billion yen) was recorded, with handset maker Sony-Ericsson, record label Sony-BMG, and LCD panel joint venture S-LCD each contributing positively. In addition, Sony recorded a one-time extraordinary gain of 81 billion yen associated with the initial public offering of their financial services unit.
Contributing to the earnings climate, Sony Computer Entertainment swung to a profit, after having incurred billions in losses over the past several quarters. Registering operating income of ~$133 million (12.9 billion yen) on record quarterly revenues of over $5 billion, an aggressive cost-cutting campaign in the manufacture of the Playstation 3 was the primary factor in coming out of the red. Playstation 2 operations continue to be the source of the largest profit for SCE, although operating profit from PS2 has declined on reduced sales of software for the system; profits generated from PSP operations themselves increased on increased sales of the hardware.
Overall, Sony shipped nearly 5 million PS3's, 5.5 million PS2's, and 5.75 million PSP's for the three months ended December 31st. Software sales declined by 20.7 million units for the PS2 and PSP collectively, offset by an increase of the same amount in PS3 software units sold. Hardware sale forecasts for the full fiscal year were revised downward for the PS3, from 11 million to 9.5 million, while the PSP received an upward revision from 10 million to 13 million, and the PS2 from 12 million to 13 million. SCE hopes to be profitable on a full-year basis beginning in the next fiscal year.
The core electronics business continued its recovery to post operating income of ~$1.46 billion (166 billion yen) on record revenues of over $18 billion. Leading the division in profitability were sales of Cyber-Shot cameras, VAIO PCs, disc manufacturing, and professional/broadcast equipment. Although sales of Bravia LCD televisions were also strong, rear-projection sets and lower margins on LCD proved a drag on TV earnings; Sony has committed to phase out its rear-projection operations in order to focus on LCD and development of OLED.
Sony Pictures saw a 49-percent drop in operating income stemming primarily from the lack of a blockbuster movie releases in the third quarter. DVD releases of both Spider-Man 3 and Superbad did well, however, and the unit earned ~$116 million. Sony Financial Services, spun off earlier in the year via an IPO (Sony maintains a 60% interest), will continue to be considered within the consolidated earnings. For the quarter, financial services posted a loss of ~$37 million based on revenue declines and asset valuations.
Across Sony's joint ventures, equity in net income of ~$446 million (46.9 billion yen) was recorded, with handset maker Sony-Ericsson, record label Sony-BMG, and LCD panel joint venture S-LCD each contributing positively. In addition, Sony recorded a one-time extraordinary gain of 81 billion yen associated with the initial public offering of their financial services unit.
Contributing to the earnings climate, Sony Computer Entertainment swung to a profit, after having incurred billions in losses over the past several quarters. Registering operating income of ~$133 million (12.9 billion yen) on record quarterly revenues of over $5 billion, an aggressive cost-cutting campaign in the manufacture of the Playstation 3 was the primary factor in coming out of the red. Playstation 2 operations continue to be the source of the largest profit for SCE, although operating profit from PS2 has declined on reduced sales of software for the system; profits generated from PSP operations themselves increased on increased sales of the hardware.
Overall, Sony shipped nearly 5 million PS3's, 5.5 million PS2's, and 5.75 million PSP's for the three months ended December 31st. Software sales declined by 20.7 million units for the PS2 and PSP collectively, offset by an increase of the same amount in PS3 software units sold. Hardware sale forecasts for the full fiscal year were revised downward for the PS3, from 11 million to 9.5 million, while the PSP received an upward revision from 10 million to 13 million, and the PS2 from 12 million to 13 million. SCE hopes to be profitable on a full-year basis beginning in the next fiscal year.
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