Sony announced its second-quarter financial results today, and things are beginning to turn around following last year’s $5.7 billion loss and a disappointing first quarter. While the company lost $198 million on $20.5 billion in revenue, it was a significant improvement over both last quarter's $312 million loss and a $350 million loss at the time last year. But the improvement comes despite lackluster sales in many of Sony's biggest businesses and troubles in China that cost the company some $375 million, according to Reuters. Nevertheless, Sony managed to stick to its forecast of a $160 million net profit for the year ending March 31st, 2013.
Before taxes, Sony made an operating profit of $388 million, compared to a $20 million operating loss at the same time last year. Contributing to this turnaround was a sixty percent drop in restructuring charges compared to last year's Q2, during which time Sony racked up a lot of expenses related to the sale of its small- and medium-sized display business. The company also benefited from $170 million in insurance proceeds related to last year's floods in Thailand and a $105 million gain from the sale of its chemical business.
Sony's gaming, imaging, and mobile pillars had a rough quarter
Since CEO Kazuo Hirai took control of the company earlier this year, Sony has been focused on what it identified as its core businesses, including gaming, imaging, and mobile devices, none of which are performing as well as the company would like. Sales in the gaming division fell nearly 16 percent to $1.9 billion, turning a meager operating profit of 29 million dollars. The performance of the imaging division was almost identical, with sales falling by 17 percent and an operating profit of $33 million . The company said this decrease was mostly because of waning demand for compact cameras, "reflecting a contraction of the low-end of the market resulting from popularization of smartphones." Sony cut this year's sales forecasts for PSP and Vita consoles to 10 million from 12 million, and for compact cameras from 18 million to 16 million, although it still expects to hit its home console target of 16 million units.
Mobile stayed flat while PC sales took a big hit
Mobile Products and Communications, which includes Sony's PC business, was a different story. Sales more than doubled to $3.9 billion compared to the same time last year, although the division still ended up being a net drain with an operating loss of $29 million. Sony points out that the increase in sales is primarily related to the February acquisition of its partner's stake in the former Sony Ericsson, not any big spike in unit sales. The bump was partially offset by a significant drop in PC sales, however.
Home Entertainment and Sound, which includes Sony's TV division, continued to suffer with another 25 percent drop in sales and an operating loss of $203 million — albeit a 60 percent improvement over the loss it took at the same time last year. Sony chalks this up to a reduction in expenses related to the production of LCD panels — a business it moved away from when it sold its stake in a joint venture with Samsung last year. But despite its decreased production capacity, the company still expects to sell 14.5 million sets by the end of March.
All in all, it was a rough quarter for Japan's biggest electronics maker. But from what we've seen, Hirai has a clear plan of action — get out of unprofitable businesses and focus on Sony's opportunities for growth — and it's paying off. If he can turn the company around from a catastrophic 2011 and in a single year put it back in the black despite the stubbornly strong yen, Sony's future could be very bright indeed.