Sony TV, Smartphone + PS4 Sales Up, Profits Plunge $1.25B

Written by David Richards     14/05/2014 | 16:46 | Category: INDUSTRY

Despite a 14.3% increase in sale,due primarily to increased sales of the new PlayStation PS4 and a significant increase in sales of smartphones, Sony has still managed to report a $1.25 Billion loss.

Sony TV, Smartphone + PS4 Sales Up, Profits Plunge $1.25B
Contributing to the loss was a decision by the Japanese Company to bail out of the PC market.

In the consumer electronics category which includes TV's and sound systems Sony sales increased 17.5% year-on-year due primarily due to favourable impact of foreign exchange rates and an improvement in Sony's LCD premium television product mix.

Their operating loss for this division was $248 million U.S. dollars. Sony said that TV sales increased 29.7% year-on-year to $7,323 million U.S. dollars.

In their mobile communication category sales increased 29.6% year-on-year to 15,826 million U.S. dollars. Sony said that this "This significant increase" was primarily due to a significant increase in unit sales of smartphones and an increase in the average selling price of smartphones as well as the favourable impact of foreign exchange rates, partially offset by a significant decrease in unit sales of PCs.

The operating loss in the Sony communication division decreased to $729 million U.S. dollars.

In the gaming category the Sony PlayStation 4 contributed to a 38.5% increase in sales of gaming products, sales came in at $9,507 million U.S. dollars. This significant increase was primarily due to the launch of the PS4 as well as the favourable impact of foreign exchange rates PlayStation3 ("PS3") hardware unit sales decreased, although PS3 software sales increased Sony said. 

The operating loss for this division fell to 78 million U.S. dollars. This year-on-year deterioration was primarily due to an increase in costs related to the launch of the PS4 as well as the recording of a 6.2 billion yen (60 million U.S. dollars) write-off of certain PC game software titles sold by Sony Online Entertainment LLC, partially offset by the above-mentioned increase in sales.

At a press briefing in Tokyo Sony management unveiled major restructuring measures to turn its fortunes.

The Company confirmed that it will sell its struggling PC unit to investment firm Japan Industrial Partners. Financial terms of the deal were not disclosed but Sony said it will take a 5 percent stake in the new outfit.

Meanwhile, Sony's flagship TV manufacturing business - that has lost $7.5 billion over the last 10 years - will be spun off by July this year, it added.

The announcement came as Sony reported much better than expected corporate earnings. Net profit for the nine-months ending December 2013 came in at 11.17 billion yen ($110.3 million), much better than a Reuters forecast for a loss of 110 billion yen.

 Sony said that problems in its long troubled consumer electronics division is still a major problem for the Company due to it's heavy losses and that the division would drag the company to its fifth net loss in six years, disappointing investors who had expected a restructuring to begin to bear fruit in the year that ends next March.

For the current year through March 2015, the Japanese technology and entertainment giant predicted a net loss of US$489 million, narrower than the current loss.

Over the past year, Sony disappointed investors by repeatedly lowering its earnings guidance. Initially, the company forecast a profit for the year that just ended, but in February it acknowledged that it would once again lose money. Only two weeks ago, Sony said that last fiscal year's loss would be bigger than expected.

As the losses have mounted, Sony has redoubled its restructuring efforts. In February it announced a cut of 5,000 jobs, the sale of its personal computer business and the split-off of its television division into a separate, though wholly owned, unit, 50 jobs were cut in Australia.