On Friday, 24 October 2014, Sony Corp. reported a narrowed loss at its film unit, but a wider overall loss.
The company also lowered its full fiscal-year forecast for the film division, now targeting $523 million in operating profit, down by $63 million or about 10 percent from its previous forecast, on revenue of $7.9 billion, down 2.4 percent. In the previous year, the company had posted an operating profit of $501 million on revenue of $8.1 billion.
Led by CEO Kaz Hirai, the conglomerate posted an overall quarterly loss of $1.25 billion after it recently forecast a wider full-year loss on revenue that rose 7 percent to $17.4 billion. The latest earnings report included a big write down for the value of its smartphone unit and came after recent news that activist investor Daniel Loeb had sold his Sony stake.
Quarterly film revenue increased 2.4 percent over the year-ago period “primarily due to the favourable impact of the depreciation of the yen against the U.S. dollar,” but dropped 3 percent on a constant U.S. dollar currency basis, to $1.67 billion. The company’s film releases in the quarter included The Equalizer, starring Denzel Washington and Melissa Leo, Sex Tape, with Cameron Diaz and Jason Segel, and the Ghostbusters 30th anniversary re-release.
Lower theatrical revenue was offset by higher home entertainment revenue, thanks to The Amazing Spider-Man 2 and Heaven Is for Real, and TV licensing revenue, driven by The Amazing Spider-Man and Men in Black 3.
Film unit operating loss came in at $10.0 million, compared with a year-ago operating loss of $17.8 million, which had been due to a decline in revenue from theatrical releases, TV licensing and home entertainment. Sony in the year-ago period had particularly cited the theatrical under-performance of White House Down, released just before the end of the quarter, as a key contributor to the loss. In the latest quarter, it said that year-ago marketing expenses were higher than due to a higher number of releases back then.
Sony’s music division posted a 21.9 percent increase in operating profit to $108 million amid lower expenses and improvement at its share of EMI Music Publishing’s performance. Music revenue rose 1.5 percent, but dropped 2 percent on a constant currency basis to $1.07 billion. The drop was driven by lower music publishing and recorded music revenue.
Video game unit revenue rose 83 percent to $2.84 billion as the division swung to a $200 million operating profit. “This significant improvement was primarily due to the impact of the…increase in sales related to the introduction of the PlayStation 4,” partially offset by a decrease in PS 3 software sales, the company said.
“These are the first consecutive quarters of operating profit in the television [manufacturing] business since 2004, which has been driven in part by our decision not to chase volume in regions like South America,” CFO Kenichiro Yoshida said about a positive trend in the conglomerate’s electronics business.
“Although it sounds like an excuse, please consider the seasonal nature of the movie business, where there are fewer theatrical releases usually in this quarter,” Yoshida said about the latest film result.
Source: The Hollywood Reporter
