Sony Posts Q2 Loss; Narrows FY10 Loss Forecast - Update

(RTTNews) - Japanese consumer electronics giant Sony Corp. (SNE | Quote | Chart | News | PowerRating) reported Friday a loss for the second quarter compared to a profit last year, reflecting 20% lower sales, losses of affiliated companies and higher restructuring charges. Stating that the second quarter results exceeded expectations, Sony revised its fiscal 2010 forecast and now expects lower loss for the year than projected earlier.

The company's net loss for the quarter attributable to stockholders was 26.31 billion yen or US$292 million, compared to a net income of 20.82 billion yen in the previous year. Loss per share was 26.22 yen or US$0.29, in comparison with earnings of 19.83 yen per share in the prior year. On average, three analysts polled by Thomson Reuters expected the company to report a loss of US$0.37 per share for the quarter. Analysts' estimates typically exclude special items. During its first quarter, the company had posted net loss attributable to its stockholders of 37.1 billion yen or 36.96 yen per share, compared with net income attributable to the company's stockholders of 35 billion yen or 33.28 yen per share, last year. In terms of U.S. dollar, the company posted a net loss attributable to Sony Corp.'s stockholders of $386 million or $0.39 per share. For the second quarter, sales and operating revenue dropped 19.8% to 1.66 trillion yen from 2.07 trillion yen in the same period last year, due to factors including slowdown of global economy and the appreciation of the yen. In dollar terms, revenue for the quarter was US$18.46 billion. On a local currency basis, sales decreased 9% year-on-year. Street analysts estimated revenues of US$19.17 billion for the quarter.

During the second quarter, the average rate of yen was 92.7 against U.S. Dollar and 132.2 against euro, which was 15.1% and 21.3% higher respectively, the company said.

Sony has realigned its reportable segments, primarily repositioning operations previously reported within the Electronics and Game segments as Consumer Products & Devices, Networked Products & Services and B2B & Disc Manufacturing. The company also noted that Pictures and Financial Services continue to be reportable segments.

Consumer Products & Devices sales and operating revenue declined 36.5% to 799.9 billion yen from 1.26 trillion yen in the previous year. Networked Products & Services revenues dropped 24.2% to 352.6 billion yen from 465.2 billion yen a year ago. B2B & Disc Manufacturing sales declined 19.6% year-on-year to 124.6 billion yen from 155 billion yen. Sales and operating revenue from Pictures were 136.4 billion yen, down 30.4%, from prior year's 196.1 billion yen. Revenues from Music surged 146.9% to 124.5 billion yen from 50.4 billion yen a year ago.

Financial Services' revenues grew 100.7% to 202.1 billion yen from 100.70 billion yen, while all other segment generated revenues of 61.57 billion yen compared to 76.53 billion yen last year. Geographically, sales and operating revenue from Japan increased 17.4% to 491.61 billion yen, while the U.S. posted 333.26 billion yen, a decline of 32.8% from last year. Revenues from Europe decreased 28.8% to 370 billion yen and other areas generated revenues of 466.34 billion yen, down 26.9% from the preceding year-quarter. In its first quarter, the company's sales and operating revenue declined 19.2% to 1.60 trillion yen from 1.98 trillion yen in the comparable period a year ago.

Costs and expenses for the second quarter declined 18.5% to 1.68 trillion yen from 2.06 trillion yen in the comparable quarter last year. Cost of sales dropped 25.1% to 1.13 trillion yen from 1.51 trillion yen in the preceding year. Selling, general and administrative expenses decreased 11.8% to 370.27 billion yen from 419.89 billion yen in the earlier year. Financial service expenses grew 35.9% to 165.36 billion yen from 121.64 billion yen in the preceding year. Loss on sale, disposal or impairment of assets increased to 11 billion yen from 6.06 billion yen in the corresponding quarter a year ago.

Operating loss for the quarter was 32.59 billion yen, compared to an operating income of 11.05 billion yen in the prior year. Excluding equity in net loss of affiliated companies of 12.3 billion yen and restructuring charges of 32.8 billion yen, operating income increased 16% to 12.5 billion yen from 10.8 billion yen in the same quarter last year.

Sony recorded equity in net loss for Sony Ericsson of 10.9 billion yen, or US$121 million, on lower sales and unfavorable foreign exchange. The company also recorded equity in net loss of 2.2 billion yen, or $25 million, for S-LCD Corp., its joint venture with Samsung Electronics.

For the six-month period, net loss attributable to the company's stockholders was 63.4 billion yen or US$704 million, compared to an income of 55.79 billion yen reported in the prior-year period. On a per share basis, loss was 63.18 yen or US$0.70, compared to earnings of 53.11 yen in the earlier year. Sales and operating revenue for the period declined 19.5% to 3.26 trillion yen from 4.05 trillion yen in the preceding year. In dollar terms, sales and operating revenue was US$36.23 billion. Looking ahead to fiscal 2010, the company now expects net loss attributable to stockholders of 95 billion yen, compared to 120 billion yen projected in July. Sony still anticipates sales and operating revenue to be 7.3 trillion yen for the fiscal. Sony's peer Panasonic Corp. (PC | Quote | Chart | News | PowerRating) reported today second quarter net income attributable to the company of 6.11 billion yen compared to 55.46 billion yen in the previous year. Basic earnings per share for the quarter was 2.95 yen compared to 26.72 yen in the year earlier period. Consolidated group sales for the second quarter decreased 21% to 1,737.8 billion yen, from 2,191.7 billion yen a year earlier.

SNE closed Thursday's regular trading at $30.54 on the NYSE. In the past 52 weeks, Sony shares have been trading in a range of $15.64 - $30.67, on a three-month average volume of 1.03 million shares.

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