Sony in profit but all is not well

Posted by a staff writer

For the first time in five years, seppuku-prone gadget behemoth Sony has posted annual profits - but the company is far from out of the woods.

Having thoroughly cut costs and selling off the less profitable parts of the family China, Sony has managed to record $436 million in net profits for the fiscal year ending 31 March. This is a considerable feat because a year earlier the company posted enormous losses, however, a closer look at the earnings report shows slumping revenues in specific segments.

Many Japanese businesses had been struggling with an unusually strong yen and Sony was no exception. A recent plummet in the yen's value has made Japanese goods more affordable for foreign buyers, including in the supply chain, and as such boosted profits at home and abroad.

In an earnings release, Sony acknowledged that a significant improvement in operating income was chiefly down to selling off assets as part of the company's restructuring. It managed to decreases losses in the TV segment and carve out an improvement in Devices, Financial Services and Pictures.

However, Sony's gaming segment deteriorated, as many punters will be putting off a PS3 with the announcement of the Playstation 4. Its game segment recorded a drastic year on year change in yen of 94.1 percent less. The PS3, PSP and Vita all failed to perform favourably, in both hardware and software.

For its games division, Sony is deciding to move PS3 production to Brazil so it can dodge enormous foreign sales tariffs. Officially imported systems cost roughly US$1000, DigitalTrends reports, so the company is going local to open up the tough market for gamers in the country. 

While the gains will appease uncertain shareholders frustrated with the company's performance, for now, analyst Gerhard Fasol of Eurotechnology Japan told the BBC the asset stripping and offsets from the yen must be taken into account.

Gains "really need to be subtracted from the results, to understand the regular operating results," Fasol said.