Sony posts surprise Q1 profit as PlayStation4 tops sales

Sony's PlayStation4 topped sales for game consoles for the first-quarter of the year. — Reuters pic
Sony's PlayStation4 topped sales for game consoles for the first-quarter of the year. — Reuters pic

TOKYO, Aug 1 ― Sony Corp posted a surprise first-quarter profit as the PlayStation 4 topped sales for game consoles and “The Amazing Spider-Man” rejuvenated box-office receipts for its Hollywood studios. The shares rose.

Net income rose to ¥26.8 billion yen (RM837 million) in the three months ended June 30, compared with 3.5 billion yen a year earlier, Tokyo-based Sony said yesterday. That compares with the ¥11.5 billion average loss of four analyst estimates compiled by Bloomberg.

Entertainment content, consoles and mobile devices underpin Chief Executive Officer Kazuo Hirai’s efforts to revive Sony as it predicts a sixth annual loss in seven years on declining demand for televisions and compact cameras. Games such as Electronic Arts Inc’s Madden NFL 15 may give the PS4 momentum, while “The Amazing Spider-Man 2” and Pharrell Williams’ hit song “Happy” spark a recovery in entertainment.

“Hirai’s reforms are starting to produce results, and he was fortunate that movies and the PS4 sold well,” said Makoto Kikuchi, Tokyo-based chief executive officer for Myojo Asset Management Co. “It’s creating an atmosphere in which Sony can make a profit.”

Sony still cut its sales forecasts for smartphones and TVs, and announced a display venture with Panasonic Corp, Japan Display Inc and Innovation Network Corp of Japan.

Shares of Sony rose as 6.1 per cent, the biggest gain on an intraday basis since February, before trading 3.7 per cent higher at 1,838 yen as of 9:12 a.m in Tokyo. The gain erased the stock’s declines this year.

‘Amazing Spider-Man’

Operating profit, or sales minus the cost of goods sold and administrative expenses, was ¥69.8 billion in the quarter, the company said. That compares with a ¥36.4 billion profit a year earlier.

The game unit posted profit of ¥4.3 billion, reversing a loss of ¥16.4 billion a year earlier. Sales of Sony’s console have outpaced those of Microsoft Corp’s Xbox One with exclusive titles including The Order: 1886.

The movie division posted a profit of ¥7.8 billion, more than double results from a year earlier. Sony’s film unit ranked third at the North American box office in the year through July 27, according to data from

“The Amazing Spider-Man 2” has grossed more than US$700 million globally, while “22 Jump Street” has ticket sales of about US$280 million.

Sony’s content business is its “crown jewel,” said Chris Konstantinos, director of international portfolio investment at Riverfront Investment Group in Richmond, Virginia, said before the announcement. The group oversees US$4.7 billion in assets.

Smartphone decline

Hirai, who cut last year’s net-income forecast three times, is trying to overcome sinking demand for the gadgets that underpinned Sony’s rise into a Japanese icon. When he took over in 2012, he said Sony’s revival would be driven by games, imaging products and mobile devices.

He apologised to investors last month after forecasting an annual loss of ¥50 billion.

Sony’s mobile products unit posted a loss of ¥2.7 billion, compared with a profit of ¥12.6 billion a year earlier. The company expects to sell 43 million Xperia smartphones this year, down from its previous forecast of 50 million.

Sony accounted for 3.2 per cent of global smartphone shipments in the March quarter, down from 3.7 per cent in the December period, according to data compiled by Bloomberg. That ranks No. 7.

World Cup

“The smartphone business is one of Sony’s core businesses,” Ryosuke Katsura, a Tokyo-based analyst at UBS AG, said before the earnings. “They are investing more into it but that may increase the risk because demand in that market is slowing.”

Hirai repeatedly has pledged to make TV manufacturing profitable, a business that has lost more than ¥700 billion over the past decade. Sony yesterday lowered its sales forecast to 15.5 million units from 16 million.

Sony already has eliminated about 18,000 jobs in the last two years, Vice President Kunitaka Fujita said last month. The company has announced an agreement to exit personal computers and a restructuring to make TV manufacturing a separate unit.

Home entertainment, which includes the TV unit, more than doubled earnings to ¥7.7 billion. Sony is shifting its focus to ultra high-definition sets, with sales increasing 11 per cent in the quarter, helped by football’s World Cup. ― Bloomberg

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