Sony Corp., the world's second- largest consumer electronics maker, said it will avoid a first annual loss in 11 years after sales of Bravia flat-screen TVs and PlayStation Portable video-game players beat forecasts.
The company reversed its full-year estimate to a 70 billion yen ($605 million) profit from the 10 billion yen loss it forecast in October, according to a statement today. Net income rose 18 percent to a record 168.9 billion yen in the three months ended Dec. 31, more than double the 63 billion yen median estimate from six analysts surveyed by Bloomberg.
Revived earnings from electronics, which contribute about 70 percent of revenue, are shoring up profit before this year's release of products such as the PlayStation 3 console and Blu-ray high-definition DVD player. Increased sales may help cover the costs of Chief Executive Howard Stringer's 210 billion yen reorganization, which includes job cuts and factory closures.
``Sony's higher forecast is a positive signal that the restructuring and efforts to improve finances and other reforms are leading to results,'' said Shigemi Nonaka, who oversees about $120 million, including Sony stock, as chairman of Polestar Investment Management Co. ``It's a turning point.''
Stringer, 63, is making progress on a three-year revival plan announced in September which includes 10,000 job cuts, 11 factory closures and more investment in chips and TVs. Sony said it will have eliminated 4,500 jobs and closed seven factories by the year ending March 31. The company spent 14.7 billion yen on restructuring in the fiscal third quarter.
Sony's shares in Frankfurt recently rose 7.4 percent to 37.95 euros, or 5,375 yen. That's 5.8 percent higher than the Tokyo close of 5,080 yen.
`Strong' Quarter
``Improved profitability for the Bravia and Vaio computers were a big reason for the strong third quarter,'' Chief Financial Officer Nobuyuki Oneda, said at a news conference in Tokyo.
Bravia LCD TVs were the best-selling brand in the U.S. in the October to December period, with a 30 percent share, Sony said. The company raised its full-year LCD TV shipment target to 2.8 million units from 2.5 million units forecast in October.
A weaker yen and rally in the Japanese stock market also helped boost earnings, Oneda said. The currency added about 23.6 billion yen to operating profit and Sony's finance business gained about 48 billion yen.
``We can't be overly optimistic because these market conditions may not continue,'' he said.
The movie studios business had a 400 million yen loss, the only division to post a loss, as releases including ``The Legend of Zorro'' and ``Zathura'' missed sales targets, today's statement showed. The unit had a 18.6 billion yen profit a year earlier.
Sony will seek box office success in May with a film based on the best-selling novel ``The Da Vinci Code.''
Stock Outperforms
Shares of Sony have risen 38 percent in the last three months, outpacing the 18 percent gain in the Nikkei 225 Stock Average, and rivals Matsushita Electric Industrial Co. and Sharp Corp. which have advanced about 27 percent.
Earnings per share rose to 161.60 yen in the fiscal third quarter from 138.08 yen a year earlier. The earnings announcement came after the market close.
Sales climbed 10 percent to a quarterly record of 2.37 trillion yen from 2.15 trillion yen a year earlier. Operating profit, or sales minus the cost of goods sold and administrative expenses, gained 47 percent to 202.8 billion yen, up from 138.2 billion yen profit a year ago.
The median forecast from six analysts in a Bloomberg News survey was for operating profit of 110 billion yen on sales of 2.153 trillion yen.
Samsung Venture
A key to Sony's revival is its LCD panel-making venture with Samsung Electronics Co., which allows Sony to lower production costs and develop products faster. Sony in November said it will invest 10 billion yen in S-LCD Corp., the venture set up in April 2004, to raise panel output by 25 percent.
``Sony's flat-panel televisions were the key driver of growth during the Christmas season, especially as they were able to procure panels from Samsung venture,'' said Keita Wakabayashi, an analyst at Mito Securities Research in Tokyo.
Operating profit at the electronics division, which includes TVs, mobile phones and chips, gained 56 percent to 78.9 billion yen in the quarter.
In Japan, Sony's share of the LCD TV market rose to 28 percent in December, almost doubling from October, according to a Jan. 17 report from Tokyo-based researcher BCN.
PlayStation 3
Operating profit at the games division, which track hardware and software revenue from the PlayStation video game series, rose 52 percent to 67.8 billion yen. Sales rose 48 percent to a record 419.2 billion yen.
The PS3 is Sony's most expensive endeavor into the video game business as the console runs on the Cell processor, Sony's fastest chip produced, and also features the Blu-ray disc, which can store at least five times more content than current DVDs.
Sony's Blu-ray is battling Toshiba Corp.'s HD DVD format to win industry and consumer backing as the next high-definition DVD standard -- reminiscent of the Video Home System (VHS) and Betamax battle in the 1980s. Toshiba earlier this month said they will come out with an HD DVD player in March, about six months ahead of Sony's Blu-ray players.
The company has said the PlayStation 3 will come out in ``spring,'' which would be about three to six months behind Microsoft Corp.'s Xbox 360 which was launched in November.
