Sony profit more than triples on digicam, yen

Demand for digital cameras, weak yen help fuel earnings turnaround; net profit for quarter at $541 million.
Written by ZDNET Editors, Contributor
Sony said on Thursday its quarterly profit more than tripled after strong digital camera sales and a softer yen far outstripped losses at its game unit.

Sony, in the final year of a three-year turnaround plan led by Chief Executive Howard Stringer, has seen its PlayStation 3 game console outsold by Nintendo's Wii since the two machines were launched late last year.

But Sony's Cyber-shot digital cameras were in strong demand. The electronics and entertainment conglomerate also benefited from a weaker yen and a firmer stock market, which has boosted earnings at its financial division.

"They didn't have much in the way of new products during the quarter but they seem to have done quite well despite that. Overall, the results leave a good impression" said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

Sony, competing with Canon in the digital camera market and Samsung Electronics in the liquid crystal display (LCD) TV industry, earned an operating profit of $825.6 million in April-June, up from $224.4 million a year earlier.

This is a turnaround from an operating loss of $941 million in the previous three months, when Sony booked losses at its once high-flying game unit.

But Sony stuck to its operating profit forecast of $3.65 billion for the year to March 2008, up sharply from $595.38 million a year earlier, when it was hit by hefty costs for launching the PS3 and recalling laptop PC batteries.

The company forecast exceeds a consensus of $3.51 billion in a poll of 20 analysts by Reuters Estimates.

In contrast, Nintendo raised its annual operating profit outlook by 37 percent to $3.07 billion on Wednesday, beating market expectations and closing in on Sony's outlook.

Losing battle?
Sony, locked in a three-way battle with Nintendo and Microsoft in the $30 billion video game market, cut the U.S. price of the PS3 by $100 this month to ignite demand.

The new price is still twice as high as that for the Wii, and some industry executives said the price cut is unlikely to drive game console sales substantially.

Sony's chief financial officer, Nobuyuki Oneda, said the PS3's performance fell short of expectations in the first quarter but expressed hope that a cut to the price of its 60GB model and the upcoming launch of an 80GB model would boost demand.

"Thanks to these measures, PS3 sales are picking up pace," Oneda told a news conference.

Sony said it shipped 710,000 units of its PS3 game console in the April-June quarter, less than a fourth of 3.43 million Wii consoles sold by Nintendo in the same period.

Nintendo raised on Wednesday its sales target for the full year to March by 18 percent to 16.5 million units. Sony said in May it aims to double its PS3 shipments to 11 million units in the same period.

Underscoring sluggish PS3 demand, Nintendo overtook Sony in market capitalization and elbowed the maker of Vaio personal computers and Bravia LCD TVs off the list of Tokyo's 10 most valuable companies.

Sony's net profit more than doubled to $551.48 million on sales of $16.43 billion, up 13.3 percent.

Its bottom line was buoyed by the robust performance at Sony Ericsson, the world's fourth-largest mobile phone maker owned by Sony and Sweden's Ericsson.

Ahead of the announcement, shares in Sony closed up 1.11 percent at 6,350 yen ($52.69) on expectations of strong results, outperforming the Tokyo stock market's electrical machinery index, which slid 1 percent.

Sony shares gained 6 percent in the three months to June 30, while the subindex rose 8 percent.

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