Sony moving toward profit after posting smaller annual loss

By Tomoko A. Hosaka, AP
Thursday, May 13, 2010

Sony aiming for black as annual loss shrinks

TOKYO — Sony Corp., maker of the PlayStation 3, stayed in the red last business year but predicts a return to profit as restructuring and an aggressive 3-D rollout bear fruit.

The Tokyo-based company Thursday reported some progress toward profitability, booking a 40.8 billion yen ($439 million) loss for the year ended March 31. That’s an improvement from the previous year’s 98.9 billion yen loss, which was Sony’s first annual red ink in 14 years.

The electronics and entertainment giant credited LCD televisions and digital cameras, as well as a broader global recovery, for helping drive its turnaround. It also cited its life insurance unit, where revenue surged 58 percent.

“We began to see improvements gain momentum from the second half last year,” said chief financial officer Nobuyuki Oneda.

Sony expects to climb back into the black in the year through March 2011. It forecasts a net profit of 50 billion yen on revenue of 7.6 trillion yen.

Since taking over in 2005, Chief Executive Howard Stringer has been trying to unite the company’s sprawling businesses, improve efficiency and rein in costs.

Sony beat its own targets and cut costs by more than 330 billion yen last year, it said. Procurement costs have declined almost 20 percent, and it has shut 11 plants since December 2008.

The efforts appear to be paying off, with the company leaner and cooperating under a more united front to make a big 3-D push this year.

Sony is not alone in its enthusiasm for three dimensional technology. Rivals like Samsung Electronics Co. and Panasonic Corp. are planning their own aggressive forays into 3-D. But Sony’s Oneda said the company is not worried.

Sony is trying to set itself apart with its rich collection of content through its Sony Pictures and Sony Music units. It has teamed up with ESPN to film sports events in 3-D, and it recently announced a joint venture with Discovery Communications and Imax Corp. to establish the world’s first 3-D television channel.

Considering the breadth of Sony’s holdings, the company holds an “advantageous position,” Oneda said.

Sony plans to release this year 3-D compatible “Bravia” LCD TVs, Blu-ray disc players, personal computers and digital cameras. The company said it expects that 10 percent of the 25 million TVs it aims to sell this year will be 3-D.

The company expects TVs, games and mobile unit Sony Ericsson — three key but previously unprofitable businesses — to return to profit this year.

Sony booked sales of 7.21 trillion yen ($77.6 billion) last business year, down 7 percent. A stronger yen, which hurts Japanese exporters, lowered revenue by about 440 billion yen, Sony said.

But it bounced back to an operating profit of 31.8 billion yen ($342 million) after a 227.8 billion yen operating loss the previous year.

For the January-March quarter, Sony posted a net loss of 56.6 billion yen ($608 million) on revenue of 1.72 trillion yen ($18.4 billion).

Its goal is to sell 60 percent more TV sets this year. It also aims to sell 15 million PlayStation 3 consoles and 23 million compact digital cameras. Last year, it sold 13 million PlayStation 3 units and 21 million digital cameras.

In trading Thursday ahead of its earnings release, Sony shares jumped 4.1 percent to 3,165 yen, beating the Nikkei 225 stock average’s 2.2 percent climb.

Sony reports earnings based on Japanese accounting standards.

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