Sony Q3 Profit Falls 5%
By Staff -- TWICE, 1/30/2007
Tokyo — Sony’s quarterly profit fell 5 percent as costs for launching its PlayStation3 video game console offset a recovery in its electronics business, according to a report released this morning.
But in an optimistic sign, the Japanese manufacturer raised its full-year earnings forecast, saying that booming Christmas sales in digital cameras and flat-panel TVs outpaced earlier targets.
Group net profit at Sony for the three months through December slipped to 159.9 billion yen ($1.3 billion) from 168.9 billion yen ($1.4 billion) the same period a year earlier.
The company said quarterly sales jumped 9.8 percent to 2.61 trillion yen ($21.4 billion). Its electronics unit reported record sales for the quarter and an operating profit of 177 billion yen ($1.5 million), double from a year ago.
Sony also raised its profit forecast for the full fiscal year through March to 110 billion yen ($903 million) from the earlier 80 billion yen ($657 million). It kept its fiscal 2006 sales target unchanged at 8.23 trillion yen ($67.6 billion).
This past quarter, it was Sony's game division that dragged on earnings the most. Sony Computer Entertainment, the gaming unit, posted a 54 billion yen ($443 million) operating loss, largely on startup costs for the PlayStation3, according to a company release.
Sony said it shipped 1.84 million PS3 machines worldwide during the quarter; the company stuck to its earlier target of shipping 6 million PS3 consoles by the end of the fiscal year.
Declining sales during the October-December period of the PlayStation2, and of the handheld PlayStation Portable, including PSP game software, also pushed down profits at its gaming unit, the company said.
Sony blamed its own price-slashing strategy for the PS3 as cutting into profits — the company lowered the price on the machine in Japan by about 20 percent before the PS3 went on sale.
Sony also got a 40 billion yen ($328 million) boost toward profits from a weak yen, and 33.6 billion yen ($276 million) from its investment in London-based Sony Ericsson, a mobile phone joint venture with Sweden's LM Ericsson, it said.
For the first nine months of the fiscal year, Sony recorded a 193.9 billion yen ($1.6 billion) profit, up 2 percent from 190 billion yen ($1.56 billion) a year earlier, on 6.2 trillion yen ($50.9 billion) sales, up 9.7 percent from 5.7 trillion yen ($46.8 billion).
Sony shares, which have recovered in recent months to about the same level they were a year ago, slipped 1.8 percent to close at 5,630 yen ($46).
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