PlayStation Powers Sony to Slim Q1 Profit

The gaming unit accounted for more than 75% of Sony's total profit while the struggling smarthpone business broke even.
Matthew HellerJuly 29, 2016

Sony surprised analysts on Friday by posting a slim first-quarter profit as its gaming unit continued to thrive and the downsized smartphone business broke even.

The 21.2 billion yen ($205 million) profit was well below the 82.4 billion yen profit Sony reported a year ago, but analysts had on average expected a modest loss. Revenue for the first quarter fell 11% to 1.613 trillion yen ($15.66 billion), reflecting in part the impact of the Kumamoto earthquake on Sony’s nearby manufacturing operations.

The smartphone business brought in 33% less revenue than a year ago, selling only 3.1 million handsets. But after being responsible for a $544 million loss in the last financial year, the unit posted a slender 400 million yen ($4 million) operating profit for the quarter.

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“It looks like a greatly-slimmed down phone business might generate just enough money to keep it going,” Engadget said.

The gaming unit, which includes PlayStation, accounted for the most revenue across the company and more than 75% of total profit. Operating profit rose 126% to 44 billion yen ($427 million), on revenue of 330.4 billion yen ($3.2 billion), up 14.5%.

The PlayStation business surpassed 40 million consoles sold to date in March and a new virtual-reality console is expected to be released in mid-October.

Sony has set a goal of an 80 billion yen net profit for the fiscal year ending in March. But the company on Friday downgraded its outlook for its struggling image-sensor business because of the yen’s recent rapid strengthening.

The unit recorded a 43.5 billion yen operating loss in the first quarter. “Image sensors — a key component for cameras in smartphone — are made in Japan but largely sold overseas, so the strong yen reduces their profits,” The Wall Street Journal explained.

On the other hand, the mobile division experienced a 4.4 billion yen positive impact from foreign exchange rate fluctuations, likely due to reduced costs of overseas manufacturing and logistics.