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Sony Optimistic After Mixed Full Year Results

Sony Optimistic After Mixed Full Year Results

May 16, 2007 | By David Jenkins

As predicted, Sony Corp's fourth quarter financial results have seen the company's losses widen thanks to the cost of launching the PlayStation 3 hardware and despite improved sales in other areas - although forecasts for the new year are buoyant.

For the year ending March 31st operating profits dropped by 68.3 percent to ¥71.8 billion ($595.3m). Net profit however was up by 2.2 percent to ¥126.3 billion ($1.05bn), and sales saw an increase of 10.5 percent to ¥8.30 trillion ($68.82bn).

The company's financial statement indicates that sales within the electronics division increased by 16.9 percent, with products such as Bravia LCD televisions, VAIO PCs and Cyber-shot digital cameras all performing strongly, despite a decline in sales of CRT televisions. Sony Pictures also saw a 29.5 percent increase in revenues, due to the success of films such as The Da Vinci Code and Casino Royale. Meanwhile, Sony Computer Entertainment sales increased by 6.1 percent compared to the previous year, due to the launch of the PlayStation 3.

The games division reported a ¥232.3 billion ($1.93bn) operating loss, slightly less than the analyst predicted deficit of ¥245 billion ($2.03m). This was attributed to "the result of the loss arising from the sale of PS3 at strategic price points lower than its production cost during the introductory period, as well as the recording of other charges in association with the preparation for the launch of the PS3 platform".

Declining software sales for the PlayStation 2 also hit the business, although cost reductions in hardware production for the PSP saw its operating income increase.

Total worldwide hardware figures for the PlayStation 3 during the financial year are put at 5.50 million units shipped. The PlayStation 2 was put at 14.20 million units (down 2.02 million units on the previous year), with the PSP on 8.36 million (down 5.70 million units).

Software shipments for the PlayStation 3 are put at 13.2 million units for the year, with the PlayStation 2 on 193 million (down 30 million units) and the PSP at 54.1 million (up 12.5 million units). No sales figures are given for either hardware or software.

The company's fourth quarter saw net losses reach a four year high, although the figure of ¥67.6 billion ($560.4m) was not as severe as analyst estimates of ¥75.8 billion ($629.3m). Sales were up 12.6 percent on the same quarter last year, to a total of $2.09 trillion ($17.71bn).

Despite the mixed results the company is bullish about the next financial year, forecasting a 513 percent increase in operating profit to ¥440 billion ($3.66bn). Net income is predicted to rise by 153 percent to yen;320 billion ($2.65bn), with a revenue increase of 6 percent to ¥8.78 trillion ($72.78bn).

The games division in particular is predicted to see an increase in sales worldwide, with "a significant reduction in operating loss expected due to rapid reductions in hardware production costs and an enhanced line-up of software titles in the PS3 business."

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