Sony Defies Expectations With Strong First Quarter News
Chris Leyton
27/07/2006
Stringer's stringent cost-cutting measures paying dividends as Sony increase profits...
Sony Corp., today exceeded expectations with its first-quarter fiscal profit, ending June 30th 2006.
Net income for the period stood at 32.3 billion yen (£150.1 million), compared with a loss of 7.3 billion (£33.9 million) in the same period last year. Sales increased during the quarter to 1.74 trillion yen (£8.1 billion) from 1.57 trillion yen (£7.3 billion) in the previous year, whilst operating profit stood at 27 billion yen (£125.5 million) compared to a loss of 6.6 billion yen (£27.9 million) a year ago.
The success has been attributed to Howard Stringer's approach to cutting costs, which has seen large job losses, closed factories and a focus on a smaller range of products.
With the strong performance of Bravia TVs, Cyber-shot digital cameras and Vaio computers, Sony's game division continued to falter ahead of the launch of the Playstation3. The loss from the games division increased to 26.8 billion yen (£124.6 million), compared to a loss of 5.9 billion yen (£27.4 million) in the previous year, as Sony scaled up development costs ahead of the launch. Sales also fell from the division as the Playstation2 enters into a natural decline, dropping from 158 billion yen (£734.4 million) to 122.5 billion yen (£569.4 million).
Speaking to Bloomberg an analyst for Merrill Lynch Investment in Tokyo claimed, "The games division are certainly going down this year because the PlayStation 3 will be a huge money loser in the beginning," before concluding, "I think Wii will sell better than the PS3."