Sony Corp., considering Daniel Loeb’s push for a partial sale of its entertainment assets, said Thursday it posted first-quarter earnings that beat estimates after cutting costs, introducing new smartphones and benefiting from a weaker yen.
Net income totaled ¥3.48 billion in the three months that ended June 30, compared with a loss of ¥24.6 billion a year earlier, the Tokyo-based company said. Profit was expected to be ¥2.6 billion, according to the median estimate of five analysts surveyed by Bloomberg News.
Sony raised its full-year revenue forecast 5.3 percent on the weaker yen while cutting expected sales of TVs and digital cameras as it considers Loeb’s plan for an initial public offering of the entertainment units. Chief Executive Officer Kazuo Hirai is preparing to release the PlayStation 4 this year to drive game earnings as it loses ground to Samsung Electronics Co. and Apple Inc.
“It’s tough for the company because it has products cannibalizing each other’s demand — such as cameras, camcorders, smartphones, games, TVs,” Yasuo Nakane, a Tokyo-based analyst at Deutsche Bank AG, said before the announcement. “Sony is improving operations but the speed of migration of consumers to mobile products is faster.”
The sales forecast was increased because of the yen, Chief Financial Officer Masaru Kato said.
Operating profit, or sales minus the cost of goods sold and administrative expenses, was ¥36.4 billion Sony said.
Loeb’s Third Point LLC, with funds that control about 6.9 percent of Sony stock, said in May it wanted the Japanese company to sell as much as 20 percent of its entertainment assets in an IPO to improve its performance and raise cash to revive electronics.
Sony’s board raised objections to Loeb’s plan and may issue a formal rejection soon, the Nikkei newspaper reported Wednesday.
Sony, which lost ¥762 billion selling TVs in the past nine years, dropped to fifth in revenue share from flat-panel TV sales during the January-March quarter as it was overtaken by China’s TCL Multimedia Technology Holdings and Sharp Corp., DisplaySearch said in a statement in June. Sony was the world’s No. 3 TV maker last year.
The company in April started selling a 55-inch model using a technology it dubs 4K for $5,000 after introducing an 84-inch model for $25,000 in November. While the company is reducing its model lineup to cut costs, Sony is moving into the niche between conventional liquid-crystal display sets and those using organic light-emitting diode panels that have four times the detail of high definition.
In smartphones, Sony didn’t rank among the top five vendors during the April to June quarter, researcher IDC said last week. South Korea’s Samsung controlled 30 percent of the global market, which expanded 10 percent when compared with the previous quarter. Samsung was followed by Apple, LG Electronics Inc., Lenovo Group Ltd. and ZTE, IDC said.
Sony’s smartphone market share in the first three months of 2013 stood at 3.8 percent, little changed from 3.6 percent a year earlier, according to data compiled by Bloomberg.
“Sony is boosting new lineups, such as 4K TVs, but the revival of the electronics operation is yet to be seen,” said Junya Ayada, an analyst at Daiwa Securities Co. in Tokyo. “TV sales aren’t probably exceeding the company’s target, while demands for camcorders and cameras are worsening.”
Sharp trims net loss
Sharp Corp. said Thursday it incurred a group net loss of ¥17.98 billion in the April to June period due partly to increased interest payments, but it was much smaller than a loss of ¥138.40 billion a year earlier, because of improved sales and restructuring efforts.
Sharp posted a group operating profit of ¥3.01 billion, a turnaround from a loss of ¥94.13 billion, due to increased sales of liquid crystal display panels, the Osaka-based electronics maker said. Consolidated sales grew 32.6 percent to ¥607.91 billion.
The company kept intact its group earnings projection for the full year through March, expecting a net profit of ¥5 billion against a loss of ¥545.35 billion the previous year, operating profit of ¥80 billion compared with a loss of ¥146.27 billion, on sales of ¥2.7 trillion, up 8.9 percent.