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February 5, 2010
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Sony Corp. (SNE) recently reported fiscal third quarter results. The company recorded earnings of ¥79.2 billion ($861 million), which was sharply higher compared to ¥10.4 billion in the year-ago quarter. The growth was primarily driven by strong Financial Services revenue, robust sales of Vaio PCs and PlayStation 3 gaming consoles as well as stringent management efforts to control costs.
During the quarter, consolidated sales grew by 3.9% year-over-year to ¥2.15 trillion ($24.3 billion). The growth was mainly attributable to improved performance in Financial Services, Networked products and Pictures segments, partially offset by lower revenues in Consumer Products and Devices segment.
Consumer Products & Devices
Revenue declined by 10.7% year-over-year to ¥1.09 trillion ($10.5 billion) primarily due to sluggish sales of LCD televisions, system LSIs and optical pickups. Operating income came in at ¥49.4 billion ($537 million), compared to an operating loss of ¥19.8 billion in the year-ago period primarily due to reduced selling, general and administrative expenses, improved product mix and favorable foreign currency translations.
Networked Products & Services
Sales grew by 1.9% to ¥606.1 billion ($6.6 billion). The growth was primarily driven by strong sales of Vaio PCs and PlayStation 3 gaming consoles partially offset by reduced PlayStation 2 hardware and software, and PSP (PlayStation Portable) sales. The division recorded an operating income of ¥19.4 billion ($211 million), compared to an operating loss of ¥5.9 billion in the year-ago period.
B2B & Disc Manufacturing
Revenue dipped by a marginal 0.5% to ¥143.5 billion ($1.6 billion). The decline was primarily caused by lower sales of broadcast- and professional-use products partially offset by increased sales of Blu-ray discs. Operating income recorded a growth of 21.5% to ¥10.1 billion ($110 million) mainly due better performance in disc manufacturing.
Pictures
Sales expanded by 16.0% to ¥203.2 billion ($2.2 billion) primarily driven by higher theatrical, home entertainment and television revenues. Operating income grew by 9.1% to ¥14.1 billion ($153 million) mainly due increased margins related to Sony Pictures Entertainment’s television library titles coupled with lower marketing costs.
Music
Sales recorded a growth of 2.0% to ¥163.5 billion ($1.8 billion) driven by music releases, such as Susan Boyle’s I Dreamed A Dream, Michael Jackson’s This Is It and Alicia Keys’ The Element of Freedom. Operating profit rose 8.2% to ¥23.1 billion ($251 million) as a result of higher sales and lower overheads and restructuring costs.
Financial Services
Revenue nearly doubled to ¥205.6 billion ($2.2 billion) from ¥103.1 billion in the year-ago quarter primarily driven by higher revenues at Sony Life Insurance, which benefitted from strong gains in its investment portfolio. Consequently, this segment recorded an operating income of ¥35.0 billion ($381 million), compared to an operating loss of ¥37.4 billion in the year earlier period.
At qurter-end, Sony had cash and cash equivalents of ¥1,004.8 billion ($10.9 billion) and long-term debt of ¥966.3 billion ($10.5 billion), compared to ¥786.8 billion of cash and ¥685.0 billion of long-term debt in the year-ago quarter. During the fiscal, the company deployed ¥360.3 billion towards capital expenditure and ¥261.0 billion towards repayment of long-term debt.
Moving forward, Sony continues to expect consolidated sales of ¥7.3 trillion for the fiscal year ending March 2010. However, the company now anticipates a narrower operating and net loss of ¥30 billion and ¥70 billion, respectively. Sony earlier guided to an operating loss of ¥60 billion and net loss of ¥95 billion for the fiscal year.
Read the full analyst report on "SNE"
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