Sony Corp. pulls through Q1 2007 despite game division losses

Stepping back from the lighter gaming news and dressing up for the industry and investment news, we’ve learned that Sony Corp. has pulled off more than it had initially expected for the first quarter of this fiscal year even while its game division still struggles to remove itself from the financial red.

 

And today, reports coming in from the executive division itself have claimed Sony was able to remain green for Q1 2007 because of strong digital camera sales and what seems to be a favorable Yen rate. Financial analysts note that the numbers “more than trebles” for the company, but don’t look too kindly to Sony’s “strategic pricing” and the losses it incurs.

“This deterioration was primarily due to the loss arising from the strategic pricing of PS3 at points lower than its production cost, although operating income from software increased due to further hardware penetration in the market,” said Sony.

The move by Sony to cut the price of its 60 GB PlayStation 3 SKU to US$ 499 was well received by consumers all around, but it slowly derailed from the concept of “price cut” when Sony revealed the maneuver as a temporary low pricing while Sony empties its 60 GB inventory to make way for the new 80 GB SKUs – still offered at the same US$ 599.

Read more at the Full Article after the jump.

Stepping back from the lighter gaming news and dressing up for the industry and investment news, we’ve learned that Sony Corp. has pulled off more than it had initially expected for the first quarter of this fiscal year even while its game division still struggles to remove itself from the financial red.

 

And today, reports coming in from the executive division itself have claimed Sony was able to remain green for Q1 2007 because of strong digital camera sales and what seems to be a favorable Yen rate. Financial analysts note that the numbers “more than trebles” for the company, but don’t look too kindly to Sony’s “strategic pricing” and the losses it incurs.

“This deterioration was primarily due to the loss arising from the strategic pricing of PS3 at points lower than its production cost, although operating income from software increased due to further hardware penetration in the market,” said Sony.

The move by Sony to cut the price of its 60 GB PlayStation 3 SKU to US$ 499 was well received by consumers all around, but it slowly derailed from the concept of “price cut” when Sony revealed the maneuver as a temporary low pricing while Sony empties its 60 GB inventory to make way for the new 80 GB SKUs – still offered at the same US$ 599.

The electronics giant posted a JPÂ¥ 66.5 billion (US$ 550 million) profit in an official announcement earlier today, even though Sony Computer Entertainment is dragging with a JPÂ¥ 29.2 billion (US$ 237 million) marked loss. SCE is enjoying a good game sales for the first quarter, however, increasing 60.5% to US$ 1.6 billion.

Strong sales of the PlayStation 2 (PS2) and PlayStation Portable (PSP) have also aided the games division in increasing their software sales output, while the “adrenalized” PlayStation 3 sales have begun cutting new territory for Sony’s software sales performance.

Overall, Sony reported a 4.7 million unit sales volume for the PS3, 31.1 million unit sales volume for the PSP and 9.9 million unit sales volume for the PS2. Sony still remains optimistic that the PS3 will sell 11 million units worldwide by the end of this fiscal year.

In the early days, SCE championed then-infant Sony Pictures and the electronics division. But by the end of the last fiscal year, SCE cut nearly US$ 2 billion from Sony’s bank, and the results for the start of this quarter may clue in a coin toss for next quarter’s buy-in, in the eyes of investors.

Sony is still struggling in the flat-screen TV market against the likes of regional market leaders Samsung, and investors are still shaky about digital camera sales and currency strength – two things that could easily sway by next quarter – being the company’s financial foothold. Local market analysts, however, haven’t excluded the possible.

“The earnings came in way above expectations and the shares will react to that. But worries about its business do remain — such as slide in prices for liquid crystal display TVs and a wider loss for its PlayStation,” said Masaki Iso, chief investment officer at Yasuda Asset Management.

Sony ended at 1.11% yesterday at JP 6,350 (US$ 53.31) in shares – attributed to investors’ thumbs up with Sony’s climbing profits – allowing the giant to outperform Tokyo’s electrical machinery index by 0.11%.