Sony's 3Q Results: Better Than Expected
As it turns out, Sony may not be as bad off as previously anticipated. We reported yesterday that the electronics giant may suffer a 50% drop in revenue, according to a sampling of five analysts and their predictions. However, Sony's official results are out, and the very dark picture painted by said analysts is a bit brighter than anticipated.
For Sony's fiscal third-quarter of 2006, profits were only down about 5.3% as the company posted a take of 159.9 billion yen (about $1.3 billion), which isn't too far below the 168.9 billion yen ($1.4 billion) they enjoyed during the same period last year. Even so, the games division did suffer the blow most had expected, primarily due to selling PS3s at "strategic price points." Consoles are often sold at a loss when they're first launched, while the company hopes to make their profits from the software. Other factors causing the loss of 54.2 billion yen ($455 million) in Q3 were the added costs of the PS3's launch preparation and a decline in PS2 and PSP sales. The loss is in stark contrast to the 67.8 billion yen ($556 million) Sony boasted in Q3 2005.
As for sales numbers, Sony shipped 4.1 million PS2s worldwide during the quarter (1.7 million each to North America and Europe and 770,000 to Japan). The company also shipped 1.84 million PS3s - awfully close to that well-advertised goal of 2 million - with 800,000 to Japan and 1 million to the U.S. Q3 shipments for the PSP hit 1.76 million units worldwide in Q3, but that's less than half the number posted for the second quarter. However, Sony still managed to sell nearly one million PSPs (950,000) in the U.S. in December alone.
Strong sales of Bravia TVs and Cyber-Shot digital cameras helped to counter the aforementioned losses, though, as such sales helped to provide Sony with a 17% increase in sales and operating revenue for its Electronics division. And in the end, while Sony cut their expected group net profit in October (down 38% to 80 billion yen), this third-quarter report was positive enough for a return to the original, more optimistic prediction of 110 billion yen ($902 million).
So it appears Sony has survived the toughest part of the PS3 business endeavor, and they've come out better than most had initially thought. Now all that's left is to churn out the games for the PS3, and everything should fall into place.
1/30/2007 Ben Dutka