Sony has record a profit in the third quarter of $870 million due to cost cutting. This resulted from the slashing of over 20,000 jobs, closing 18 per cent Sony factories and a move to third-party manufacturers for products like Bravia TVs, PlayStations and digital cameras.
Sales of Sony consumer products decreased by 10.7 per cent year-on-year. Contributing to this was a slump in demand for Sony’s Bravia televisions, which the company claims was affected by intensified price competition. In Australia Sony started slashing TV prices in an effort to compete with Samsung, LG and Panasonic.
Sales of the PlayStation 2 dropped to 2.1 million units from 2.5 million units a year earlier, while the PlayStation Portable saw a drop to 4.2 million from 5.1 million. The launch of a revised PlayStation 3 pushed sales of the console up to 6.5 million units from 4.5 million and cost improvements in manufacturing of the machine helped offset the drop in sales of the PS2 and PSP.
In the networks products group Sony saw a small rise in sales of 2 per cent as Vaio PCs achieved higher sales worldwide.
The results appear to vindicate the aggressive programme of job cuts, factory closures and internal restructuring launched by chairman and chief executive Sir Howard Stringer a year ago. However, attention will now turn to whether Sony has a credible plan to achieve acceptable sales growth, margins and profits in its next fiscal year.
“Operating results improved significantly due to increased sales and reductions in both cost of sales and selling, general and administrative costs,” said a Sony spokesperson.
Sony also announced the closure of another plant, a facility in Singapore that makes lenses for Sony digital cameras. The move is part of a plan to outsource the making of Sony products to third party manufacturers.
In Australia, Sony CEO Carl Rose is refusing to say whether Sony Australia is still profitable after the company started slashing the cost of products across several categories last year. It also resorted to giving away millions of dollars worth of PlayStation gaming consoles, TVs and Blu-ray players in an effort to increase sales.
Sales at Sony Pictures were up by 16 per cent on the previous year because of the success of 2012 and Michael Jackson’s ‘This Is It’. Michael Jackson, along with Susan Boyle’s ‘I Dreamed a Dream’, also helped boost Sony Music, which posted a 2 per cent rise in sales and an 8 per cent rise in operating profits.
In spite of the improved results, however, Sony is still only forecasting an operating margin of 1.9 per cent on its core businesses for the full year, indicating how far it still has to go to achieve a full recovery.
For the full year ending 31 March, Sony narrowed its loss forecast. It now expects a net loss of close to A$1 billion dollars. In comparison, Apple reported a quarterly profit of US$3.8 billion dollars, while Samsung reported a quarterly profit of $2.7 billion dollars due to increased sales of TVs and mobile phones.