Sony Consumer Division Buoys Earnings - InformationWeek
IoT
IoT
Infrastructure // PC & Servers
News
5/17/2010
08:40 AM
50%
50%

Sony Consumer Division Buoys Earnings

Sony's $1.4 billion loss in consumer products and video games offset by $1.7 billion profit in the financial services division.

Sony, best known in the U.S. for its consumer electronics and gaming systems, performed best as a Japan-based financial services company over the past fiscal year. Earnings contributions by the company's financial services division enabled the company to record positive operating income in the fiscal year ending March 31.

Sony's largest division, Consumer Products and Devices (CPD), posted $500 million in losses on $34.7 billion in sales, which nevertheless was a 60 percent improvement in operating income over the prior year, according to the company's financial results released Thursday.

The division was impacted by lower prices on BRAVIA LCD televisions, and by lower sales of Handycam video cameras and Cyber-shot compact digital cameras due to contraction of these markets. In total, lower CPD sales resulted in a reduction in gross profit of $1.1 billion. The stronger Japanese yen also pulled down CPD profits by $733 million.

Yet these negative factors were more than offset by CPD's cost-cutting measures, including $1.9 billion improvement in the division's cost of sales ratio and $1.4 billion in reduction in selling, general and administrative expenses. This has been achieved by CEO Howard Stringer's recent restructuring activities, which have included selling facilities, cutting 20,000 jobs, and relying more heavily on outsourcing for manufacturing.

Sony's second-largest division, Networked Products and Services, posted a 10 percent sales decline on $17 billion in revenues on PlayStation and VAIO products, for an $893 million loss. PlayStation Portable sales were down 30 percent and Playstation2 software down 57 percent. These declines were partially offset by a 10 percent increase in PlayStation3 software, which now contributes over half of Sony's gaming revenues.

Sony's Financial Services division contributed $1.75 billion in operating income to the parent company on $9.2 billion in revenue. The Financial Services division includes Sony Life Insurance, Sony Bank and Sony Finance International. Sony Life Insurance posted a 72 percent increase in revenue from investment gains and valuation gains from the rebound of the Japanese stock market over the past fiscal year, along with increases in insurance premiums.

Sony Ericsson, a 50-50 joint venture between the two companies, faced significant challenges in regional market conditions, particularly in Europe. Sales were down 37 percent compared to the prior year.

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
IT Strategies to Conquer the Cloud
Chances are your organization is adopting cloud computing in one way or another -- or in multiple ways. Understanding the skills you need and how cloud affects IT operations and networking will help you adapt.
Video
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll