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Sony Makes A Profit from Gaming, Smartphone Division Smashed

Sony Makes A Profit from Gaming, Smartphone Division Smashed

Net profit was $250m in the three months to 30 June, up from a year ago. A big contributor was the sale of Sony property assets.

Sales at its gaming console division rose almost 96% during the period however Sony still expects a net loss of 50bn yen for the financial year through March 2015.

Sony’s PlayStation 4, which was launched in November last year, has emerged as the bestselling “new-gen” console.

Its success has helped Sony overtake rival Nintendo in sales of game consoles for the first time in eight years.

Sony sold 18.7 million systems in the last financial year – which ended in March – compared with Nintendo’s tally of 16.3 million video games machines.

The figures also include sales of the older PS3 and original Wii, in addition to Nintendo’s 3DS and Sony’s PlayStation Vita handhelds.

Sony said that they have sharply cut its forecast for sales of smartphones, one of the pillars on which the Japanese technology giant had hoped to rebuild its troubled electronics business.

The move comes as consumer’s desert the Sony made smartphones that have struggled to find a niche in the consumer market. 

Sony’s troubled TV business was profitable however sales have fallen from the 16 million TV sales forecast in May to 15.5 million units. The consumer electronics division spanning sound, headphones and TV’s is still unprofitable. 

Sony spun its TV arm into a separate unit in July. This segment that includes TVs posted a ?7.7 billion profit in the latest quarter, compared with a ?3.4 billion profit a year earlier.

Sony’s chief financial officer, Kaneshiro Yoshida said Sony needed to make more effort at structural reform, because its electronics business was still generating a loss.

The big problem for Sony is their mobile phone division which is under threat from Chinese brands.

A year ago Sony was tipping the division to be their most profitable in their latest results the division has posted an operating loss amid sagging sales, forcing the company to cut its annual sales target to 43 million handsets from the 50 million it had predicted in May. 

Instead of making a profit the mobile division will merely break even this year, Sony said. In the fiscal year that ended in March, Sony sold 39 million phones and posted a profit of ?12.6 billion.

“Our estimate in May was optimistic,” said Kenichiro Yoshida, at a news conference.

The Wall Street Journal said that the dialling back of Sony’s smartphone ambitions represents a serious setback to Chief Executive Kazuo Hirai’s efforts to revive the company’s reputation for innovation. Sony executives have said the company needs to expand its smartphone business, because many of the areas in which it competes-from cameras to videogames and movies-come together in mobile devices.

Mr. Yoshida said the mobile unit is reviewing its midterm business plan, and might have to lower its forecast again, to an annual loss.

To keep the business profitable, Sony plans to cut costs by streamlining its smartphone line up and slowing the pace of product introductions, 

Three Chinese smartphone makers that rank between No. 3 and No. 5 globally in terms of market share-Huawei, Lenovo and Xiaomi all made sizable gains in the latest quarter, according to data from Counterpoint, a technology research firm. 

While Huawei’s smartphone shipments nearly doubled, to 20.6 million, Sony’s shrank to 9.4 million from 9.6 million, giving it a market share of about 3.1%. Among the leading brands, it was the only one to post a decline.