// Troubles silverlining in Sony's smartphone ~ EDUCATION & TECHNOLOGY

Saturday, 1 November 2014

Troubles silverlining in Sony's smartphone

Sony Mobile is a wholly owned subsidiary of Tokyo-based Sony Corporation, a leading global innovator of audio, video, game, communications, key device and information technology products for both the consumer and professional markets.

With its music, pictures, computer entertainment and online businesses, Sony is uniquely positioned to be the leading electronics and entertainment company in the world.

Through its Xperia™ smartphone and tablet portfolio, Sony Mobile delivers the best of Sony technology, premium content and services, and easy connectivity to Sony’s world of networked entertainment experiences.
The Xperia™ portfolio

combine stand-out design and superior entertainment technology with the powerful performance consumers would expect from a Sony smartphone and tablet. They let consumers play, watch, listen and create all within the world of Sony: via the Sony Entertainment Network, Xperia users can watch Hollywood blockbusters on Video Unlimited, stream music from a catalogue of millions of songs on Music Unlimited and enjoy games from PlayStation Mobile. And with simple connectivity consumers can share their entertainment across devices and screens

Sony posted a smaller than expected second-quarter operating loss on Friday, hailed by its finance chief as proof that the Japanese group's restructuring program is paying off.

The company said the reduced operating loss was due in part to rising sales of image sensors to smartphone manufacturers, though the poor showing from its own Xperia phones weighed heavily on results.

Sales of the image sensors, used in Apple's iPhones and increasingly in Chinese-made handsets, made the devices unit the biggest earner within Sony's flagship electronics division and offset some of a 176 billion yen ($1.58 billion) impairment charge on its mobile division.

That left an overall operating loss for the three months to September 30 of 85.6 billion yen, beating analyst expectations of nearly double that.

"We are on our way to achieving 400 billion yen in operating profit next year," CFO Kenichiro Yoshida declared at a media briefing on Friday, referring to a target set in May when he announced plans to set aside 135 billion yen to restructure the bloated electronics division.

"Restructuring is progressing well and right now we think we will be able to cut 20%t of staff at our distribution companies and 30% at headquarters."

However, poor sales of the Xperia smartphone have dashed Sony's ambitions of becoming the world's third-biggest smartphone maker behind Apple and Samsung Electronics.

China retreat

Yoshida said on Friday that Sony would shrink its exposure to the Chinese smartphone market, where more nimble, fast-growing rivals have dented his company's hopes of making any significant progress in the world's biggest smartphone market.

Sony will quit the development and sale of China-only handsets, Yoshida said, with an accompanying cut in its smartphone sales forecast to 41 million from 43 million, against sales of 39 million last year.

It also wound back its operating loss forecast by 28 billion yen. In addition to the impairment charge, that leaves the mobile operation heading for a 204 billion yen loss this financial year.

Incoming mobile division chief Hiroki Totoki, picked by chief executive Kazuo Hirai to turn around the ailing unit after earning his stripes at a Sony internet subsidiary and Sony Bank, said he would focus on improving the speed of management response to changes in the market after assuming his new post on November 16.

"Sony's got the will to continue with its smartphone business and it's hoping income from the business improves. Todoki has reformed businesses before, so he's probably thinking of rebuilding it," said Hideyuki Fukunaga, the chief executive of fund manager Investrust.

Xbox trounced

Sony's shrinking slice of the smartphone market is in stark contrast to its dominance in game consoles, where its PlayStation 4 has trounced the Xbox One made by closest rival Microsoft and has broken even within only a year of its release, a feat its predecessor achieved in four years.

Sony increased its annual operating profit forecast for the gaming unit by 40% to 35 billion yen after selling 3.3 million PlayStation 4 consoles in its second quarter. By October 18 it had sold 12.3 million consoles, against 6.1 million Xbox One sales, according to market research website VG Chartz.

The operating profit outlook for Sony's imaging, music and device units was also increased. Strong sales of image sensors and batteries, as well as a weaker yen, propelled the devices business to a quarterly operating profit of 29.6 billion yen, up 149% year on year.

However, a weaker yen is negative for Sony as a whole, Yoshida said, with the company losing 3 billion yen for every yen the Japanese currency falls against the dollar.

Shares of Sony closed 0.8% higher before the earnings announcement, compared with a 4.8% rise for the Nikkei benchmark index .N225 after the Bank of Japan announced further monetary easing that weakened the yen by as much as 2.5% to beyond 111 against the dollar.

Sony posted a net loss of 136 billion yen for the quarter and held its full-year net loss forecast at 230 billion yen.


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