Sony says annual profits almost triple to hit record

May 14, 2008

, TOKYO, May 14 – Japan\’s Sony Corp. said Wednesday its annual net profit almost tripled to hit a record high as brisk sales of digital cameras and laptop computers offset continued losses from the PlayStation 3.

The electronics giant has endured a difficult past few years amid tough competition from rival products such as Apple\’s iPod and Nintendo\’s Wii, but is now enjoying a recovery under its first foreign boss, Howard Stringer.

Sony said its annual operating profits leapt more than five-fold and are expected to rise further this year, although its bottom line is set to worsen due to a stronger yen and smaller one-off gains.

The games division narrowed its losses but remained stuck in the red as the PS3 faced tough competition from Nintendo\’s Wii.

Net profits came to 369.44 billion yen (3.53 billion dollars) in the year to March, up from 126.33 billion yen the previous year, when Sony was hit by the cost of recalling millions of faulty computer batteries.

Operating profit surged 421.9 percent to 374.48 billion yen, the group\’s second-highest ever, helped by property sales and the purchase of its advanced semiconductor operations by rival Toshiba.

Revenue increased by 6.9 percent to an all-time high of 8.87 trillion yen.

"The results are not bad," said Hirose Osamu, electronics analyst at Tokai Tokyo Research Centre.

"But compared to Nintendo, (Sony) has been lagging behind since the beginning. Investors would have liked to see Sony narrow its losses more (in the games division) but they\’ve accepted the result," he said.

The company\’s game division logged an operating loss of 124.5 billion yen compared with a loss of 232.3 billion a year earlier.

Sony has been seeking to shed non-core assets and revive its mainstay electronics business. It has axed thousands of jobs since Stringer, a Welsh-born US citizen, took over in 2005.

For the current year to March, Sony forecast a 21.5 percent drop in net profit to 290 billion yen, partly due to a stronger yen and reduced gains from asset sales.

But it expects operating profit to increase by 20.2 percent to 450 billion yen as revenue goes up 1.4 percent to 9.0 trillion yen.

Sony chief financial officer Nobuyuki Oneda said profits from the core electronics division were expected to decline this year due to a stronger yen, which is bad for export earnings.

But he said the game division should return to profit "thanks to a reduction in the cost of PS3 hardware and an increase in the number of software titles."

Sony introduced a cheaper, slimmed down version of the PS3 in Japan and the United States in November last year in an attempt to better compete with Nintendo\’s more affordable and popular Wii.

Sony said it had sold 9.24 million PS3s in the year to March.

For the fiscal fourth quarter to March, the group reported a net profit of 29.04 billion yen against a year-earlier loss of 67.56 billion yen.

Operating losses shrank to 4.67 billion yen from 113.37 billion as revenue fell 6.5 percent to 1.95 trillion yen.

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