Sony Corporation Posts First Net Profit After Five Years

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Sony Corporation (NYSE:SNE) today reported its first annual profit for the last five years owing a great deal to weakening of the yen. However, expecting the same trend to continue in the coming quarters is questionable.


The electronics and entertainment company posted a net profit of ¥43 billion, or $435 million at the current exchange rate for the year ended in March, versus the loss of ¥456.7 billion a year earlier. Sales for the year increased by 4.7 percent to ¥6.8 trillion.

For the January-to-March quarter, the effect of a weaker yen helped the company to post a net profit of ¥93.9 billion compared to a net loss of ¥255.2 billion for the same period a year ago.

Along with a favorable yen, improved revenues from Sony Corporation (NYSE:SNE)’s former mobile venture with Ericsson of Sweden and from its financial services unit helped to improve the full-year profits.

 “We set out this year with the aim of doing everything we can to get back in the black,” Masaru Kato, Sony’s chief financial officer, said. “This year, we absolutely intend to make a profit in electronics.”

Efforts & Outlook

The electronics company has been working hard to mend its way back to profits. Sony Corporation (NYSE:SNE) has terminated its flat-panel television agreement with Sharp Corporation (TYO:6753) and Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930), closed its chemical product business and also parted with some of its office buildings, including its New York headquarters for $1.1 billion.

Sony Corporation (NYSE:SNE)’s chief executive, Kazuo Hirai has been toiling hard to bring back the glory days once enjoyed by the respectable organization. The company announced last week that many of its executives have decided not to take bonuses to help the company to save on costs.

For the current financial year, the Tokyo-based firm expects the profit to surge by 16 percent to ¥50 billion. Sales are estimated to rise by 10 percent to ¥7.5 trillion owing to new releases including a video game console, the PlayStation 4, during the holiday season along with a new smartphone.

Sony (SNE)’s Segment Results

Despite posting profits, the company’s television business was in losses for the eighth straight year. Sales at the division were down 30 percent from last year. However, outsourcing the panel manufacturing process has helped the company narrow down losses. For the year, losses from the panel division have gone down from ¥137.9 billion to ¥69.9 billion. Sony expects to achieve a break even, in the segment, this financial year.

The entertainment company has also been losing out in its digital camera and video business, owing to the growing popularity of smartphones. However, the company has witnessed some success in the premium segment.

Sales from the mobile device segment were up by 18 percent backed by higher unit sales and sale of premium priced devices.

Gaming division profits were down from last year owing to sluggish performance of its PlayStation Vita handheld machine which was introduced in late 2011.

Prospects look good for the company—Sony Corporation (NYSE:SNE)’s stock has doubled in the past six months. On Thursday, shares closed at ¥1,744 down 1.4 percent. The current price is almost three times less than what was enjoyed by the company at its peak five years before. The difference, apart from reflecting a huge fall in fortune, also reflects the potential that the stock still hold.

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