Sony on Wednesday its operating profit dropped a staggering 90 percent in the second quarter of the financial year, hit by a surging yen, a weak global economy and intense price competition. Despite strong flat-panel TV and PlayStation 3 sales, and box office revenue from the movie “Hancock,” the rising value of the yen was simply too much of a negative factor. Operating profit dropped to 11.0 billion yen ($113 million) in the three months through September, down from 111.6 billion in the same period of the previous year, a company statement said.
“The expectations being factored in are that Christmas sales will be considerably negative,” Sony’s chief financial officer, Nobuyuki Oneda, told a news conference.
“But we cannot predict what sales will be like after Christmas.”
Sony also reduced quarterly losses in the gaming business with sales in the sector improving 10 percent. Sony sold 2.43 million PlayStation 3 consoles during the quarter, up 85 percent from the same period a year earlier. Sony’s gaming unit has been losing money for some years because of high research and startup costs for the PlayStation 3, a machine that has struggled against the popular Wii. The Wii has been losing traction lately as fans are finding themselves increasingly bored with the limited feature set and lack of online capabilities.
Particularly healthy was demand for flat-panel TVs, Vaio personal computers and single-lens reflex cameras, Sony said. However, Sony said it has cut its sales target for liquid crystal display televisions to 16 million units this financial year from a previous 17 million due to tough competition.
“The decline in prices (of televisions) is now steeper particularly in the United States and Europe,” Oneda said.
“Considering foreign exchange and other issues, we cannot avoid suffering a considerable loss,” he said, adding it would be hard to return to the black in the television business over the next few years.
Its entertainment business was on positive turf, as sales at Sony Pictures Entertainment rose 3.4 percent thanks to the box-office hit “Hancock” featuring Will Smith. Other movies that did well were “Step Brothers” and “Pineapple Express,” and the home entertainment releases of “21” and “Vantage Point,” Sony said.
Sony’s financial business, ranging from insurance to banking, incurred a loss of 25.3 billion yen, reversing a profit of 23.1 billion yen a year earlier due to a plunge in Japanese share prices.
Troubles at the company’s joint venture Sony Ericsson have added to the woes. The Swedish-Japan mobile telephone maker plunged deep into the red in the quarter with a net loss of 18 million euros (22.8 million dollars).
Read more 2Q results and slides at Sony’s IR page.
