Sony Cuts PS3 Estimates, but Earnings Strong

Sony reported record sales and net profit for the last three months of the fiscal year on the back of strong sales in its core electronics division, it said Thursday.

Net profit for the period jumped 25 percent to ¥200.2 billion (US$1.9 billion) and sales rose 9.6 percent to ¥2.859 trillion.

Behind the better results were healthy sales of some of Sony's best-known products including Bravia LCD (liquid crystal display) TVs, Vaio personal computers and Cybershot digital still cameras. Weak spots included projection TVs and cell phones. The entire electronics division achieved a 10.2 percent jump in sales to just over ¥2 billion but profits fell 8 percent.

Operating profits fell 7 percent as price competition meant slimmer margins despite better sales, said Nobuyuki Oneda, Sony's chief financial officer, at a Tokyo news conference.

The most profitable products during the quarter were digital still cameras, digital video cameras, personal computers, optical discs and broadcast and professional equipment. The largest decrease in profits was seen in system LSI chips and LCD televisions.

Sony said it will withdraw from the rear production TV market because of poor prospects for the business. It will continue to focus on LCD TVs while investing and building up the new OLED (Organic Light Emitting Diode) screen technology. Sony put the world's first OLED TV on sale in Japan in December and in the U.S. in January with production set at a few thousand sets per month.

"I do not see a rapid growth in production in the future," said Oneda of the OLED business. Looking ahead Sony plans to launch larger TVs than its current 11-inch screen model and also put OLED into different applications but hasn't yet decided the timing for such future products.

In the gaming division sales rose 31 percent and that unit returned to profitability but the year isn't progressing quite as Sony had expected. Sales of the PlayStation 3 hit an all-time high of 4.9 million units, thanks largely to the launch of a new version of the PlayStation 3 and a price cut as key to the better sales of the consoles. But they remain behind plan.

"Although we feel confident about the future of the PlayStation 3 business sales have not reached the level required to cover the lag from the first half," said Oneda. As a result Sony cut its full-year sales estimate from 11 million units to 9.5 million units.

Sales of the PlayStation Portable also hit a record of 5.8 million units and Sony raised its full-year target from 10 million units to 13 million units. The previous-generation PlayStation 2 also had a good quarter thanks to its low price and Sony now expects to sell 13 million of the consoles in the year to March, up 1 million units from its last estimate.

Looking ahead to the end of the full fiscal year in March Sony raised its net profit estimate to ¥340 billion, which would be a record if achieved. The sales forecast of ¥8.98 trillion, which will also represent a record if achieved, was left unchanged.

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