Sony Q1 profit tripples on digicam sales, yen
TOKYO (Reuters) - Sony Corp. said its first-quarter profit more than trippled, beating expectations, after strong digital camera sales and a softer yen far outweighed losses on the struggling PlayStation 3 game console.
Sony has been mounting a steady profit recovery on the back of expanding sales of key electronics products and a leaner cost structure after shutting factories and cutting thousands of jobs over the past few years.
But the company, in the final year of a three-year turnaround plan under Chief Executive Howard Stringer, has seen its PlayStation 3 outsold by rival Nintendo Co. Ltd.'s Wii console and its game division is mired in the red.
The electronics and entertainment conglomerate also faces tough price competition in the flat-screen TV market, and two factors that have boosted earnings -- the weaker yen and the stronger stock market -- could easily move the other way.
"The earnings came in way above expectations and the shares will react to that," said Masaki Iso, chief investment officer at Yasuda Asset Management. "But worries about its business do remain -- such as slide in prices for liquid crystal display TVs and a wider loss for its PlayStation."
Sony, which competes with Canon Inc. in the digital camera market and Samsung Electronics Co. Ltd. in LCD TVs, reported an operating profit of 99.32 billion yen ($825.6 million) in April-June, up from 27.05 billion a year earlier.
That was a record profit for Sony's fiscal first quarter.
The result easily beat a consensus forecast of 52 billion yen, according to four analysts polled by Reuters Estimates.
"They didn't have much in the way of new products during the quarter but they seem to have done quite well despite that. Overall, the results leave a good impression" said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.
Besides the game unit, weak spots include its TV operations.
"We will have competitive lineup of TVs this fall ... But it seems quite tough to achieve a profit (in the TV business) for the year," Sony Chief Financial Officer Nobuyuki Oneda told reporters.
Sony stuck to its operating profit forecast of 440 billion yen for the year to March 2008, up sharply from 71.75 billion a year earlier, when it was hit by hefty costs for launching the PS3 and recalling PC batteries. The company forecast exceeds a consensus of 423.7 billion yen in a poll of 20 analysts.
LOSING BATTLE?
Sony, locked in a three-way battle with Nintendo and Microsoft Corp. in the $30 billion video game market, cut the U.S. price of the PS3 by $100 this month. But even after the cut the PS3 is still twice as expensive as the Wii.
Sony's Oneda said, however, the price cut and forthcoming launch of an 80-gigabyte model would ignite demand. Continued...
