Would you believe it? Sony has finally made a profit selling flat panel TVs and Blu ray players. The profit comes after the company slashed over 20,000 jobs, and closed 18 major factories. Also contributing to the company’s success is a move to third party manufacturers to make Sony products.
Analysts said that they were surprised by the rebound to profitability in the fiscal first quarter. Sony Corp reported a net profit of $289 million for the quarter, with sales up 3.8 per cent to $18.7 billion.
In the gaming market Sony is still losing money. However the division has managed to cut losses — whereas last year it was $422.1 million in the red, this year’s fiscal first quarter sees Sony’s game segment report a $43 million loss due to improved sales for the new slim PS3.
Sales in the Networked Products and Services division, which houses PlayStation and PC products, saw sales up 32 per cent thanks largely to the lower-cost, higher value PlayStation Slim. PS3 unit sales more than doubled year over year, with 2.4 million units sold in the quarter, compared with 1.1 million units the previous year. Sony’s fiscal first quarter ends June 30.
The company saw PS3 software gains too, up 10 million units year over year to 24.8 million units. PSP software also rose to 9.2 million units, a 900,000 unit year over year increase. PlayStation 2 software declined severely, from 8.5 million to 3.4 million year over year — even while sales of the hardware remained exactly the same, at 1.6 million units sold.
Under pressure from the Nintendo DSi PSP unit sales declined slightly from 1.3 million units to 1.2 million units year over year.
“This is surprisingly good news for investors,” said Mizuho Investor Securities analyst Nobuo Kurahashi. “Sony’s forecasts in May disappointed many investors, but this revision shows that the company was being very cautious, perhaps overly cautious.
The most significant factor was an earnings rebound in the critical consumer, professional and devices division, which produces core electronics products such as LCD televisions, Blu-ray video players and digital cameras. The division posted a Y50.1 billion profit in the quarter, versus a Y8.9 billion loss a year earlier.
Sony said its television business was profitable in the quarter as well, and is on track to meet the goal of making money for the full year. Sony’s television business has lost money for six straight years, but the company has taken the bold step of selling off its overseas TV factories and turning to contract manufacturers for production to improve profits.
“We continued to build on last year’s momentum from the electronics business and it was able to once more be a main factor for our earnings improvement,” said Sony Chief Financial Officer Masaru Kato.