Sony surprises markets with first-quarter profit

Consumer electronics giant Sony Corporation has posted an unexepectedly large profit in its first quarter as the weakness of the Japanese Yen boosted the value of overseas sales, but the company's games division slipped into the red.

The company announced a group profit of 23.3 billion Yen (174 million Euro) in the three months ended June 30th, massively beating both last year's figure of 1.1 billion Yen (8.2 million Euro) and market expectations of around 4 billion Yen (30 million Euro).

However, the company's games division recorded a loss of 2.9 billion Yen (21.6 million Euro) for the quarter as hardware sales slipped and research and development investment in the next generation of handheld and home console systems continued to mount.

The loss reverses an operating profit of 1.1 billion Yen (8.2 million Euro) recorded by the games division in the same quarter last year, and comes despite an overall increase in software shipments - with 38 million units of PS2 software shipped worldwide during the quarter, compared with 31 million last year.

In hardware terms, the PS2 shipped only 0.71 million units during the three month period, down massively from the 2.65 million figure a year previously. However, it's thought that this figure is artificially low due to shipment timing and inventory shortages of the console, particularly in the USA, and demand for the hardware has certainly not declined to the extent that this figure would suggest.

For the full year, Sony did not change its estimates despite the better than expected Q1 profits, and still expects to make an operating profit of 160 billion Yen (1.2 billion Euro) in the year to March 31 2005 - after discounting some 130 billion Yen (970 million Euro) in restructuring costs.

"For the Sony Group, the fiscal year ending March 31, 2005 has been earmarked as an important year for strengthening the foundation necessary for achieving mid- to long-term growth," according to Sony chairman and CEO Nobuyuki Idei. "We will continue to enhance the competitiveness of our products in key categories such as digital AV products, and will release enticing new products such as the PlayStation Portable handheld videogame system."