Sony reports a tough first quarter

A dismal first quarter pushed profits down at Sony, the Japanese consumer electronics and media giant announced Thursday.

The company reported a net loss of 30.1 billion yen (US$241 million, as of June 30, the last day of the quarter being reported) -- better than the first quarter of last year which was hit by an extraordinary charge due to an accounting change. With the effects of the accounting change removed, Sony's net loss in the quarter just ended would have been 36.1 billion yen against a net profit of 12.0 billion yen a year earlier. Sony reports in accordance with U.S. GAAP (generally accepted accounting practices).

Operating income in the quarter plunged 90.2 percent to 3.0 billion yen while sales and operating revenue increased 4.6 percent jump to 1.6 trillion yen, largely on the back of better results in the company's computer game and movies businesses.

In its core electronics business, which makes up around two-thirds of revenue, the company had no place to hide, with sales dropping on a local currency basis in all regions of the world. Sony reported an operating loss of 807 million yen compared to an operating profit of 53.4 billion yen in the same period last year, as revenue from sales to customers fell 1.2 percent in the sector.

Sales of televisions, information and communications equipment and components all fell, with those of CD-R/RW drives and mobile phones doing particularly badly. Sony's cell phone handset business was hit by a series of recalls in Japan during the quarter that cost the company 12 billion yen.

With its PlayStation 2 console now established as a major gaming platform around the world, and launch costs well behind, the picture at Sony's games division improved during the quarter. The unit reported an operating loss of 3.1 billion yen against a loss of 18.0 billion yen a year ago, while sales to customers jumped 38.5 percent to 150.9 billion yen.

Production shipments of PlayStation and PS one hardware were 3.21 million during the quarter against 0.63 million in the same period a year ago while that of PlayStation 2 hardware more than tripled to 4.34 million units. Software sales were also strong with PlayStation 2 title shipments totaling 11.5 million units.

In Sony's other business areas, music sales increased 12.7 percent to 135.6 billion yen as the unit returned to the black with an operating profit of 4.4 billion yen. The movies business saw sales increase 25.6 percent to 136.3 billion as operating losses narrowed to 2.7 billion yen and financial services sales jumped 11.1 percent to 119.6 billion yen on 37.0 percent better operating profits of 9.6 billion yen.

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