Sony returns to black, Panasonic profit soars

October 29, 2010
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, TOKYO, Oct 29 – Japanese electronics giant Sony said Friday it had swung back to a second quarter profit and raised its full year forecast 17 percent, citing strong earnings for its Playstation and computer units.

The maker of Bravia televisions and Cyber-shot cameras reported a profit of 31.1 billion yen (375 million dollars) in the fiscal second quarter, compared with a 26.3 billion yen loss a year ago, despite worries about the strong yen.

Under chief executive and president Howard Stringer the Japanese company has been streamlining operations and cutting costs to trim back the sprawling group, which was battered by the global downturn.

The electronics giant has been forced to undergo major restructuring — slashing thousands of jobs, selling facilities and turning to suppliers for parts — after seeing losses pile up as the financial crisis hit demand.

The moves helped the firm to revise its full-year net profit forecast to 70 billion yen from 60 billion yen.

For the quarter, group operating profit stood at 68.7 billion yen from a loss of 32.6 billion a year ago thanks to a strong performance in its game and PC business, the company said.

And in the six months ended September, Sony reported a 56.8 billion yen profit compared with a 63.4 loss in the same period a year earlier.

Also Friday, Panasonic said its group net profit surged five-fold to 31.0 billion yen in the September quarter from 6.1 billion yen in the same period a year earlier.

Operating profit soared by more than 70 percent to 85.2 billion yen.

"The Japanese electronics makers are showing a strong performance thanks to brisk sales of flat TV panels, Blu-ray recorders and other high-tech products," said Mitsushige Akino, analyst at Ichiyoshi Investment Management.

"But their outlook is still uncertain, and the number one concern is a strong yen."

The likes of Sony, Panasonic and other Japanese exporters are threatened by the strength of the yen which is trading close to its post World War II high of 79.75 to the dollar.

Sony on Friday said it would cut its full year sales forecast to 7.4 trillion yen from 7.6 trillion yen.

The sustained strength of the Japanese unit erodes repatriated overseas profits and make goods more expensive overseas, and Sony warned Friday of "a difficult business environment for the remainder of the fiscal year."

Its latest estimates are based on the assumption that the yen will trade on average at 83 to the dollar in the second half, down from 90 yen estimated in July. The currency is currently trading at around 80.60 to the greenback.

Sony left its assumed rate for the euro unchanged at 110 yen.

The company is also banking on the mounting popularity of products that enable three-dimensional viewing, having this year launched televisions showing 3D images.

It has also launched its new Move motion-sensing controllers for PlayStation 3 videogame consoles in a bid to stimulate demand and fend off rivals Microsoft and Nintendo in the competitive gaming space.

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