Sony swings to US$35m profit


Fri, Aug 02, 2013 - Page 15

Japan’s electronics giant Sony Corp said yesterday it swung back to a net profit of US$35 million for the April-June quarter, while boosting its annual sales forecast.

Sony racked up a ¥3.5 billion net profit for the three months to June, reversing a net loss of ¥24.6 billion a year earlier, as it lifted its full-year sales target to March 2014 to ¥7.9 trillion, up from ¥7.5 trillion.

At the operating level, Sony said its profit in the quarter soared more than five-fold to ¥36.4 billion.

The results come after Sony said in May it had booked its first annual net profit in five years, offering a glimmer of hope for the former market leader.

However, its jump back into the black was largely due to fluctuations in the value of the yen and gains from a string of asset sales — including unloading its Manhattan office building for more than US$1 billion — while its television and electronics business continues to struggle.

Meanwhile, Sony’s board is likely to reject a US hedge fund’s proposal to spin off part of its profitable entertainment arm, a report said yesterday.

Nikkei business daily said the firm’s directors discussed the idea on Wednesday and were leaning toward turning the proposal down after reviewing a financial adviser report on the deal.

Some directors argued that Sony can compete better as a whole firm instead of hiving off part of the entertainment division, the Nikkei said, without citing sources.

US billionaire Daniel Loeb, who says his hedge fund Third Point has amassed the largest stake in Sony, called on the Japanese firm’s executives to spin-off up to 20 percent of the unit, which includes a music label and Hollywood movie studio.

He had said the spin-off would make the entertainment unit’s managers more accountable and help improve profitability. In a quarterly letter to investors earlier this week, Loeb said corporate culture in the subsidiary was “characterized by a complete lack of accountability and poor financial controls.”

The division “remains poorly managed, with a famously bloated corporate structure, generous perk packages, high salaries for underperforming senior executives and marketing budgets that do not seem to be in line with any sense of return on capital invested,” Loeb wrote.

He added that “drastic — rather than incremental — action is required.”

Sony’s share price rose 1.74 percent to close at ¥2,104 in Tokyo trading.