Sony profits up, led by flat TVs, cameras
Weaker yen helps the Japanese conglomerate overcome PlayStation 3 game losses.
July 27 2006: 7:15 AM EDT
TOKYO (Reuters) -- Sony Corp. swung to a better-than-expected quarterly operating profit, propelled by robust sales of its Bravia brand liquid crystal display (LCD) TVs, Cybershot digital cameras and Handycam camcorders.
A weaker yen also helped the electronics and entertainment conglomerate overcome valuation losses at its life insurance unit and start-up costs for its PlayStation 3 game console.
"The first quarter result shows a strength in the electronics division, though we have to take into account the effect of the the yen's weakness during the quarter," said Mizuho Securities senior analyst Koichi Hariya.
Sony (Charts) earned an operating profit of 27.05 billion yen ($232.5 million) in April-June, topping a consensus forecast of 18 billion yen in a poll of seven analysts by Reuters Estimates and swinging from a 6.58 billion yen loss a year earlier.
Net profit totaled 32.29 billion yen, in a turnaround from a 7.26 billion yen loss a year earlier, helped by gains from its mobile phone joint venture with Ericsson.
Struggling electronics maker Sanyo Electric Co. Ltd. swung to a quarterly operating profit of 2.6 billion yen from a loss of 13.0 billion yen a year earlier, thanks to cost reduction. But slumping sales of digital camera and mobile phones for overseas markets sent its quarterly sales down 11 percent.
Sony's mainstay electronics division, which accounts for about 70 percent of its total revenues and makes Walkman music players and Vaio computers, posted a 47.4 billion yen profit, its first profit for the April-June quarter in two years.
"The biggest contributing factor was television. It was still in the red, but we made a substantial progress. We also saw brisk sales of digital cameras, and cost-cutting measures progressed smoothly," said Chief Financial Officer Nobuyuki Oneda.
The box-office hit "The Da Vinci Code" boosted Sony's movie division sales by 42 percent in the quarter, but marketing expenses linked to the release of new pictures such as "Monster House" pushed the business into the red.
Sony will launch PS3, the latest version of its blockbuster game machine, in November. It will compete for holiday buyers' attention with Nintendo Co. Ltd.'s upcoming Wii and Microsoft Corp.'s Xbox 360 in the nearly $30 billion video game market.
For the full year to next March, Sony revised up its operating profit forecast by 30 percent to 130 billion yen as it started booking patent-related income as recurring revenue rather than miscellaneous income. It kept unchanged its net profit forecast of 130 billion yen.
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