Sony’s Q3 Operating Profit Soars in Games, Falls in LCD TVs

Sony’s Q3 profit fell 8.6 percent to $893 million ($1 = 81 yen, the rate in effect on Dec. 31) as sales, hurt by a stronger yen and price erosion in LCD TVs, declined 1.4 percent to $27.24 billion, the company said Thursday. Overall operating income in the quarter ended Dec. 31 fell 5.9 percent to $1.7 billion and was down in most of Sony’s business segments, the company said.

One big exception was Networked Products & Services, which includes Sony’s game businesses. In that sector, operating income soared 135 percent to $564 million, Sony said. “This was mainly due to a significant improvement in the cost of sales ratio coupled with an increase in gross profit from higher sales, partially offset by unfavorable foreign exchange rates."

The game business benefitted from “significant cost reductions” in PS3 hardware and higher unit sales of PS3 software, Sony said. PS3 hardware unit sales fell to 6.3 million from 6.5 million in Q3 a year earlier, while PSP unit sales declined to 3.6 million from 4.2 million and PS2 unit sales remained flat at 2.1 million, Sony said. PS3 software unit shipments jumped to 57.6 million from 47.6 million, and PSP software unit shipments climbed to 16.5 million from 15 million. However, PS2 software unit shipments plummeted to 5.3 million from 11.2 million.

Sony left unchanged from October its full-year forecast for unit sales in game hardware and software. It still expects to sell 15 million PS3 consoles, a rise from 13 million last fiscal year. PSP unit sales are still expected to fall to 8 million from 9.9 million, and PS2 unit sales are still expected to drop to 6 million from 7.3 million. Sony sold about 196 million software units for all PlayStation products last year, and expects to sell about the same this fiscal year, the company said.

In Sony’s core Consumer, Professional & Devices segment, sales jumped 4.2 percent in the quarter to $13.47 billion. But operating income in the segment fell 47.2 percent to $331 million, the company said. Sony blamed the segment’s lower operating income on declining average selling prices in LCD TVs and compact digital cameras. Unit sales of Sony’s Bravia LCD TVs soared 46.3 percent in the quarter to 7.9 million from 5.4 million a year earlier. On a monetary basis, Sony’s TV business jumped only 20.3 percent to $5.15 billion. For the full fiscal year, Sony has downgraded its forecast on LCD TV unit sales, saying it now expects to sell 23 million sets, versus the 25 million projected in its October forecast. Still, those 23 million sets sold would represent a 47.5 percent increase from the 15.6 million it sold last fiscal year.

Sony’s unit sales forecast for the fiscal year also suggested slightly more pessimism on Blu-ray player sales than in the October forecast. Sony now thinks it will sell 5 million Blu-ray players through March 31. That’s down from the 5.5 million projected in the October forecast. Last fiscal year, Sony sold 3.3 million Blu-ray decks. At the same time, Sony left unchanged its forecast that it will sell 11 million DVD players this fiscal year. That’s just a minor decline from the 11.5 million DVD decks it sold last year.