Sony reports strong first quarter earnings
Saturday 28th July 2007, 06:06:00 PM, written by Carl Bender
Sony has reported first quarter earnings of ~$540 million, doubling net income over the year-ago period and beating analyst expectations. Operating income in the core electronics division increased by 77% to ~$684 million, aided primarily by increased sales of Sony Cyber-shot cameras, Handycam camcorders, semiconductor sales to the gaming division, and a favorable exchange rate environment. Although sales of the popular Bravia line of TVs contributed strongly to revenues, profits were negative due to increased downward pressure on pricing at retail; Sony expects that television-related operations will turn profitable in the second half of the fiscal year.
Other notable performances came in from the Sony-Ericsson joint venture, which expanded market share in the global handset market to 9% on the back of strong Cyber-shot and Walkman phone sales, as well as segment diversification towards the mid and low-end. Their strong performance resulted in a contribution of ~$144 million to Sony's bottom line. Sony's financial services division also did extremely well, with an over 600% increase in operating income to ~$274 million.
In the high-profile gaming division, Sony registered a ~$237 million loss, increased slightly from the loss registered a year ago on production and sales of the loss-leading Playstation 3 hardware. Sales of the legacy Playstation 2 however remained strong, with a registered increase over Q1 '06 of 16% to 2.7 million units for the quarter. PSP experienced strong growth as well, rising by 52% vs the year-ago period to sell 2.14 million units for the quarter; PS3 meanwhile came in under expectations with 710k in sales between April and June, a performance Sony hopes to improve upon in the present quarter following the recent price cut announcement for the United States. Sony reiterated their target of 11 million PS3's sold by the end of the fiscal year, and made the announcement that going forward, console-related sales figures will now refer to the number of systems sold into retail, rather than units produced and shipped - a previous point of contention among some industry watchers.
During the conference call Q&A period, Sony CFO Nobuyuki Oneda gave some insights into future Playstation 3 production plans as well, confirming that 65nm Cell production is underway without notable yield issues. With the move to a 65nm RSX potentially later this year, and cost reductions in the PS3 optical pickup unit, Oneda is cautiously hopeful that SCE will be able to turn profitable on the production of the console before the end of March, '08. When asked when a revision of the console featuring the 65nm Cell might become available, he indicated that such consoles will not begin production until the present inventory of 90nm chips has been worked through.
Looking ahead, Sony maintained guidance for total net income of 320 billion yen - $2.6 billion in todays dollars - for the fiscal year ending March 31st, 2008.
Other notable performances came in from the Sony-Ericsson joint venture, which expanded market share in the global handset market to 9% on the back of strong Cyber-shot and Walkman phone sales, as well as segment diversification towards the mid and low-end. Their strong performance resulted in a contribution of ~$144 million to Sony's bottom line. Sony's financial services division also did extremely well, with an over 600% increase in operating income to ~$274 million.
In the high-profile gaming division, Sony registered a ~$237 million loss, increased slightly from the loss registered a year ago on production and sales of the loss-leading Playstation 3 hardware. Sales of the legacy Playstation 2 however remained strong, with a registered increase over Q1 '06 of 16% to 2.7 million units for the quarter. PSP experienced strong growth as well, rising by 52% vs the year-ago period to sell 2.14 million units for the quarter; PS3 meanwhile came in under expectations with 710k in sales between April and June, a performance Sony hopes to improve upon in the present quarter following the recent price cut announcement for the United States. Sony reiterated their target of 11 million PS3's sold by the end of the fiscal year, and made the announcement that going forward, console-related sales figures will now refer to the number of systems sold into retail, rather than units produced and shipped - a previous point of contention among some industry watchers.
During the conference call Q&A period, Sony CFO Nobuyuki Oneda gave some insights into future Playstation 3 production plans as well, confirming that 65nm Cell production is underway without notable yield issues. With the move to a 65nm RSX potentially later this year, and cost reductions in the PS3 optical pickup unit, Oneda is cautiously hopeful that SCE will be able to turn profitable on the production of the console before the end of March, '08. When asked when a revision of the console featuring the 65nm Cell might become available, he indicated that such consoles will not begin production until the present inventory of 90nm chips has been worked through.
Looking ahead, Sony maintained guidance for total net income of 320 billion yen - $2.6 billion in todays dollars - for the fiscal year ending March 31st, 2008.
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