Sony's Q1 Profit Doubles Despite Widening Game Losses

Sony reported fiscal Q1 net income jumped 106% to ¥66.5 billion ($552m) or ¥32.25/share, on sales growth of 13.3% to ¥1.98t ($16.4b). The weak yen increased operating profit by ¥25.7b ($213m) and strength across most units more than offset a 9% drop in operating profit at its Game division (¥-29.2b, -$242m). Game division sales increased around 60%, but losses were exacerbated when Sony cut the price of the PlayStation 3, which was already being sold at a loss. Consumer Electronics sales rose 11.6% and operating profit climbed 77.3% on strong camera sales. Sony's Pictures division returned to profitability on the success of Spider Man 3. Sony Life Insurance helped the Financial division record a 49% increase in sales and 637% surge in operating profit. Sony Ericsson also reported strong quarterly earnings growth. Sony reiterated its full fiscal year (ending March) guidance for operating income of ¥440b ($3.65b), compared to last year's profit of ¥71.75b and analysts' average estimate of ¥423.7b. Ordinary shares of Sony gained 1.1% to ¥6,350 ($52.74 ADR equiv. at ¥120.4/$1) ahead of its earnings release. Its ADRs rose 1.3% to $52.31 on Wednesday.

Sources: Press release, Bloomberg, Reuters
Commentary: Goldman Keeps 'Buy' Rating on Sony, Raises Target • Sony's Playstation 3 Battle Plan Isn't About Gaming - It's About Costs • Sony Ericsson's Q2 Profit Soars, But Misses; Gains Global Market Share
Stocks/ETFs to watch: SNE. Competitors: MC, NTDOY.PK, CAJ, AAPL, PHG. ETFs: ADRA, ITF, EWJ
Related: Sony full Earnings Release [pdf], Earnings Presentation [pdf], Annual Report

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