Sony Presents Fiscal Year 2005 (2nd Qtr.) Reports

[Christopher]

Despite Sony beating forecasts with 2Q earnings climbing more than 52 percent, they have still projected an overall loss for the FY2005.

The PSP sold about 3.75 million units in the second quarter of 2005 --

- 520,000+ in Japan

- 1.4 million in North America

- 1.83 million in Europe

Overall, there are now 14 million PSP units worldwide. As for HDD + Flash-based Memory Portable Audio, Sony has sold about 4.5 million ATRAC devices this year. Not bad!

Unfortunately, Sony reports there is a 12.2% (six month) loss in comparison to the same time last year with it's Audio division as a whole -- so far in FY2005 Sony has posted a 247.2 million yen (about $2.15 million USD) sales and operating revenue, compared to 281.6 million yen (about $2.4 million USD) a year ago.

------

For the forum's interest, I have attached *.pdf's of FY 2005 Q2 reports:

Earnings Release:

Presentation Slides: MZNH900.zip

Supplemental Material for Electronics:

Here is further introspect from Business Week:

Sony Corp. said Thursday its profit in the latest quarter dropped by nearly half from a year ago, as electronics sales stayed flat, its movies business stumbled and earnings suffered from a heavier tax burden and losses related to equity holdings.

The electronics and entertainment company reported a net profit of 28.5 billion yen ($246 million) for the three months ended Sept. 30, down 46 percent from 53.2 billion yen the same period a year ago.

Sales for the quarter stayed unchanged at 1.7 trillion yen ($15 billion). Sony kept its forecast for its full fiscal year, which runs through March, at a loss of 10 billion yen ($86 million).

Sales were up in Sony's game unit because of healthy demand for the PlayStation Portable, or PSP, handheld machines, but results were shakier in the company's core electronics unit. Rising sales of liquid-crystal display TVs and camcorders failed to offset falling sales of plasma TVs and digital cameras, as well as lower prices of LCD TVs, Sony said in a statement.

Also weighing on Sony's results were higher corporate tax payments, totaling 65 billion yen ($561 million) in additional expenses.

Sony announced a revival plan last month under Chief Executive Howard Stringer, the first foreigner to head the Tokyo-based company.

John Yang, equity analyst with Standard & Poor's in Tokyo, said he wasn't quite convinced that Sony was turning itself around, with its chips and LCD TV businesses still struggling, despite a better showing with the PSP and camcorders.

"That's not going to save the day for Sony," he said, adding that he foresees tough times for Sony in the second half. "If Sony wants to be a player, all of Sony has to do well."

Sony said it also took special losses for its equity holdings in an LCD panel joint venture with Samsung Electronics Co. Also hurting earnings were losses related to its acquisition of movie studio Metro-Goldwyn-Mayer Inc., as well as those linked to its investment in its music division Sony BMG Music Entertainment, which was formed after Sony's music unit combined with German media company Bertelsmann AG's BMG label.

Like other Japanese electronics makers, Sony has been struggling in the last several years amid falling prices in consumer electronics and the emergence of cheaper Asian rivals.

Sony fell behind Apple Computer Inc.'s iPod in portable music players. It was also late in putting out flat-panel TVs, falling behind Japanese rivals Matsushita Electric Industrial Co. Ltd., which makes Panasonic brand products, and Sharp Corp.

Although Sony's sales were largely flat in electronics, its operating income was improved from a year ago because of a return of pension payments from the government, under new Japanese regulations.

In Sony's gaming unit, sales shot up 79 percent to 214 billion yen ($1.8 billion) from 120 billion yen a year earlier, on the back of healthy demand for the PSP, which went on sale this year, as well as the older PlayStation 2 home console, Sony said. Some 3.75 million PSP machines were shipped worldwide during the quarter.

Sales in Sony's movies division declined 17 percent for the quarter because of the absence of revenue from the hit "Spider-Man 2" which had boosted earnings the previous year. The disappointing performance of this year's "Stealth" hurt Sony Pictures Entertainment, sending it into an operating loss.

Sony also recorded robust results in its financial services business, mainly because of better sales at Sony Life, an insurer, with revenue up 40 percent and operating income more than doubling.

Mitsuhiro Osawa, analyst with Mizuho Investors Securities in Tokyo, said Sony appeared to be holding up OK with its latest products that reflect its turnaround effort, but cautioned that the big battle is still ahead during the Christmas shopping season.

"The critical test is yet to come, and Sony's been trying to solve its problems, one thing at a time," he said.

Sony, which lost 7.3 billion yen ($63 million) the first quarter, recorded a 21.2 billion yen ($183 million) profit for the half-year through September, down 72 percent from 76.5 billion yen the same period in 2004. First-half sales totaled 3.26 trillion yen ($28 billion), down 2 percent from 3.31 trillion yen in the first half of the previous year.

Sony shares, which rose earlier this year to 4,000 yen ($34.50) but have since settled down to about the same level they were a year ago, closed at 3,730 yen ($32), down nearly 1 percent on the Tokyo Stock Exchange. Sony announced earnings after trading ended Thursday.