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Smartphones and currency boost Sony's quarter

Signs of turnaround in mobile unit, but at expense of other key businesses such as cameras, says Japanese giant

By CAROLINE GABRIEL

Published: 1 August, 2013

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Clear signs of a smartphone turnaround boosted fiscal first quarter results at Sony, which has injected new life into its mobile devices since gaining full control of its former joint venture with Ericsson.

Boosted by smartphone sales and a weaker yen, Sony reported a 13% year-on-year leap in revenues for the quarter ended June 30, reaching ¥1.71 trillion ($17.3bn), though without currency fluctuations, the figure would have been down 3%. Operating profit was up to ¥36.4bn from ¥6.3bn a year ago, driven by the mobile communications and financial services divisions, while net profit was ¥3.5bn, reversing a year-ago loss of ¥24.6bn.


The mobile division, which includes handsets, PCs and tablets, saw its sales grow by 36.2% year-on-year to ¥389bn, on the back of some successful high end device launches in the Android-based Xperia range and better leverage of Sony's gaming and content brands, as it pursues a vision of a common media experience across multiple screens. Operating profit in the unit was ¥5.9bn, reversing last year's loss of ¥28.1bn.

The result included a gain of US$7bn from patent royalties, highlighting the competitive advantage which large IPR holders like Sony, Nokia and Samsung have in the mobile market. Smartphone sales were 9.6m units, up from 8.1m in the March quarter and 7.4m a year earlier, and despite the intense competition in the smartphone sector, as growth shifts to the midmarket, Sony managed to increase average selling prices.

It maintained its full year outlook for unit sales of 42m smartphones, but cut its forecast for cameras, TVs and PCs. "It's tough for the company because it has products cannibalizing each other's demand, such as cameras, camcorders, smartphones, games, TVs," Yasuo Nakane, an analyst at Deutsche Bank in Tokyo, told Bloomberg. "Sony is improving operations but the speed of migration of consumers to mobile products is faster."

It also raised its full year guidance for total sales by 5.3% to ¥7.9 trillion from a May prediction of ¥7.5 trillion, but left its outlook unchanged.

Sony is considering an activist investor proposal that it should mount an IPO of its entertainment units and also preparing to ship the PlayStation 4, to try to regain share in this sector.

Despite progress in smartphones, Sony remained outside the top five in the second quarter of this year, according to IDC figures, which gave it market share of 3.8%, only slightly up from the year-ago figure of 3.6%. The top five in Q213 were Samsung, Apple, LG, Lenovo and ZTE, said IDC. And amid the tough conditions in the TV and camera market, Sony knows handsets alone cannot deliver the electronics business recovery CEO Kazuo Hirai has pledged to investors.

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