Sony Profit Beats Estimates, Helped by Games, Cameras

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Sony Corp., Japan’s biggest exporter of consumer electronics, reported third-quarter profit that beat analysts’ estimates, after earnings from the PlayStation games division doubled.

Net income dropped 8.6 percent to 72.3 billion yen ($886 million) in the three months ended Dec. 31, from 79.2 billion yen a year earlier, the Tokyo-based maker of Bravia televisions said in a statement today. That beat the 65.9 billion yen average of six analyst estimates compiled by Bloomberg.

Profit from the games division, Sony’s second-biggest product group, posted earnings that exceeded analysts’ estimates as PlayStation 3 titles such as “Gran Turismo 5” lured consumers. That cushioned a slump in TV prices, which eroded earnings at Samsung Electronics Co. and Panasonic Corp.“The game unit had a good season thanks to hit game titles,” said Yuuki Sakurai, who helps oversee the equivalent of $8.4 billion as chief executive officer at Fukoku Capital Management Inc. in Tokyo. “Sony went on the right track to reduce cost and streamline operations. The efforts have started to show in the earnings statement.”

Operating profit, or sales minus the cost of goods sold and administrative expenses, fell 5.9 percent to 137.5 billion yen, exceeding the 128 billion yen average analyst estimate.

Revenue fell 1.4 percent to 2.21 trillion yen and the company trimmed its full-year sales forecast 2.7 percent to 7.2 trillion yen amid falling TV prices.

Game Titles

Sony rose 0.7 percent to 2,867 yen at the 3 p.m. close in Tokyo trading before the announcement. The stock gained 9.6 percent last year.

Sony’s Networked Products and Services Group that makes PlayStation games and Vaio computers reported profit more than doubled to 45.7 billion yen, helped by cost reductions to make the PS3 console and increased sales of game titles. Analysts expected 28.1 billion yen, based on the median estimate.

The world’s No. 2 maker of portable game players introduced its motion-sensing controller, called Move, in September in the U.S. and in the following month in Japan. The company plans to offer a new model of its PSP device and game content on smartphones and tablet computers equipped with Google Inc.’s Android operating system by the end of this year.

Sony sold more than 5.5 million copies of the “Gran Turismo 5” car-racing title in 12 days, the company said Dec. 10. Sales of Capcom Co.’s “Monster Hunter Portable 3rd” for the PlayStation Portable reached 2 million units in Japan during its first week, the publisher said Dec. 6.

TV Sales

Sony maintained its target to sell 15 million units of PS3 game machines, about 196 million game titles and 8.8 million personal computers, the company said today.

Operating profit at the main Consumer, Professional and Devices Group, the division that makes TVs, Cyber-shot cameras and semiconductors, fell 47 percent to 26.8 billion yen, about a third less than the median analyst estimate. Revenue gained 4.2 percent to 1.09 trillion yen.

The world’s No. 3 TV maker cut its TV sales target to 23 million units from 25 million projected earlier for the year ending March 31. Sony has lost about 26 billion yen from TV operation so far this fiscal year, including 13 billion yen during the quarter, Chief Financial Officer Masaru Kato said.

Samsung, LG

Samsung, Asia’s biggest maker of semiconductors, flat screens and mobile phones, last week said net income increased 13 percent to 3.42 trillion won ($3.1 billion), helped by earnings at the telecommunications business. The company’s digital-media unit that assembles TVs posted a loss of about 170 billion won.

LG Electronics Inc., the world’s No. 2 TV maker, reported a net loss of 256.4 billion won, its first loss in seven quarters. LG booked a 274.1 billion won operating loss at its mobile division.

“TV profits are being pressured globally,” said Shiro Mikoshiba, an analyst at Nomura Holdings Inc., before the announcement. “ The yearend business probably went moderately well at Sony but was probably not as strong as to clear all the inventories. Sony’s loss from TV may become bigger in the second half.”

Sony sold 7.9 million units of TVs during the quarter, up from 5.4 million a year earlier, the company said. Panasonic, Sony’s closest domestic rival, sold 6.4 million sets during the quarter, the company said yesterday.

“The Social Network”

Samsung’s shipments of flat panel TVs rose 17 percent to 12.7 million units in the three months ended Dec. 31, the company said Jan. 28. LG’s TV shipments rose 33 percent to 8.7 million units in the quarter, the company said Jan. 26.

Profit at the film unit declined 67 percent to 4.7 billion yen, after a 27 percent decline in sales, the company said. “The Social Network,” which garnered eight Oscar nominations, generated strong revenue while lower sales of catalog products and higher marketing expense pressured the division’s profit, it said.

Sony revised its assumptions for the yen’s exchange rate to the dollar to 82 yen from 83 yen for the three months to March 31. The company maintained its forecast for the yen’s rate to the euro at 110 yen.

The yen gained 23 percent against the euro and 15 percent against the dollar in 2010, the best performer among 17 major currencies tracked by Bloomberg. A stronger yen damps the repatriated value of overseas earnings at Japanese exporters.

By Mariko Yasu and Mikako Nakajima at Bloomberg

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