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Sony sees off earthquake damage

by on29 July 2016

Things could have been a lot worse

Sony’s operating profit fell in its first quarter by 42 percent but the company managed to contain the earthquake damage to one of its image sensor factories.

Profit reached $542.7 million for April-June versus $933 million in the same period a year earlier but analysts expected things to be a lot worse.

The firm maintained its full-year profit forecast of $2,889,603,000 yen, a 2 percent rise over the previous year. It also estimated the April quake's impact on overall business at $770,676,000, less than its initial forecast of $1,107,846,750.

Sony partially halted production of its cash-cow image sensors to assess damage from quakes that shook the southern city of Kumamoto, home to one of its five image sensor plants. Losses were offset by strong demand for PlayStation 4 videogame software and cost cutting in its smartphone business.

The gaming division, which Sony sees as its biggest growth driver in the medium term, reported profit of $423,994,560 up from $187,985, 460 last year. The business is widely expected to receive renewed impetus from the PlayStation VR, Sony's upcoming virtual reality headset to be launched in October.

Sony has reshaped itself to target expansion in lucrative areas such as videogames, entertainment and camera sensors, and not to pursue sales growth in areas such as smartphones where price competition with Asian rivals is acute.

In line with this strategy, Sony on Thursday said it has agreed to sell most of its ailing battery business to Murata Manufacturing.

Sony flagged a possible loss from the sale depending on the as yet-undetermined price, but analysts viewed the deal as another move out of unprofitable operations.

The sale "will have a big impact on reducing all-company fixed costs," analysts at Mizuho Securities said in a client note, pointing to the transfer of 8,500 workers in the business.


Last modified on 29 July 2016
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