Mobile growth lifts Sony's poor quarter

The Japanese giant said sales rose by just 1.4% year-on-year, to ¥1.51 trillion,and that modest uptick came from the mobile business, which it bought out from joint venture partner Ericsson earlier in the year. However, without the assimilation of Ericsson's 50% stake in the venture, sales would have been down 7%, and group operating income fell sharply, by over 77% on the year-ago period to ¥6.3bn ($80.5m), and the firm slashed its profit forecast for the full year.

Sony put a lot of the blame on macroeconomic factors - the global recession and exchange fluctuations for the yen - but it also has significant weaknesses of its own to address, notably declining sales in TVs, gaming consoles and PCs. These trends make it imperative that Sony makes a rapid success of its strategy to focus on advanced mobile products, and to harness its content assets to create a multiscreen media platform from TV to phone.

In the mobile and communications division, there was a 133% year-on-year rise in sales to ¥285.6bn ($3.65m), because of the consolidation of the former Sony Ericsson. Without that change, sales would have been up 14% year-on-year in the unit. That heartening figure shows that Sony is starting to reap the benefits of a long transition from midrange handsets to focusing almost entirely on high end models. It said average selling prices rose and it also saw better unit sales of key models like Xperia S and Acro HD. It sold 7.4m smartphones in the quarter and raised its full year forecast to 34m units, well up on last year's 22.5m.

However, the consumer electronics major has taken on plenty of challenges with full ownership of the handset unit too and it reported an operating loss of ¥28.1bn ($360m), versus a profit of ¥1.6bn a year earlier. Some of this was down to the inclusion of the Vaio PCs in this division, as well as one-time charges for the takeover - without those, the loss would have been ¥7.2bn.

Citing the strong yen and weak world economy, Sony cuts its full year sales forecast to ¥6.4 trillion, down from an estimate of ¥7.4 trillion issued in May. This would still represent a 5% improvement on the last fiscal year. The firm said it expects to remain profitable, but cut its guidance for operating profit to ¥130bn, and for net profit ¥20bn. Sony added that it expected "significant growth" in underlying sales and operating income at Sony Mobile this year, and also in its components business, but warned that its gaming and TV businesses will remain weak.

"Sony is working to improve profitability [of the mobile division] and harness the full power of the Sony Group by further enhancing cooperation within the electronics businesses, improving the efficiency of engineering by enhancing collaboration between engineers, strengthening product competitiveness, restructuring operations, and, in the area of sales, increasing cooperation with Sony Group companies in each region," said the corporate statement.

Pages: 1 | 2