Sony Suffers Profit Loss
August 2, 2012

Sony’s Q1 Earnings Disappoint

Michael Harper for — Your Universe Online

Sony has unveiled their Q1 results and the news was not great. Following their first quarter performance, the PlayStation and PS Vita maker has cut back their forecast for their 2012/2013 profits, as well as lowered their sales expectations in both gaming consoles.

Sony said their operating profit between the months of April and June had fallen by 77% to 6.28 billion yen, or $800 million. Before their earnings call, analysts had expected a slip of 36%.

Following this news, Sony shares were priced the lowest they´ve been in 32 years. Many investors, it seems, are concerned about their ability to compete with the likes of the new big three in tech, Apple, Microsoft and Samsung.

“I think they´re in a pretty difficult position,” said Yuuki Sakurai, CEO of Fukoku Capital Management, speaking to Reuters.

“If they don´t clearly show what is going to change under the new management I think the market will crush the stock again.”

Sony´s new management, led by CEO Kazuo Hirai, plans to recover from their monumental losses of 455 billion yen in their last fiscal quarter.

In addition to blaming a strong yen and a weak economy, Sony has also blamed sales of their gaming consoles for their big fall.

"This decrease was primarily due to lower sales of hardware and software of the PSP and PS3, partially offset by the contribution of the Vita introduced from December 2011," said Sony in their earnings call.

Helping along the company's losses last quarter are some less-than-adequate numbers from their gaming division. In the last quarter, their gaming division ended with an operating loss of 3.5 billion yen, or $44.7 million. During the same quarter last year, Sony´s gaming unit ended with an operating profit of 4.1 billion yen, or $52.3 million.

In light of these numbers, Sony has decided to cut back their expectations for sales of their popular PlayStation and Vita consoles and devices.

"Primarily due to the lowering of the annual unit sales forecast for portable hardware, sales are expected to be significantly lower [for the Game segment] than the May forecast," the company stated. "Sales are expected to be essentially flat and operating income is expected to decrease significantly year-on-year."

How many units was Sony able to push out the door?

During their first quarter, which ended June 30, Sony only managed to sell 2.8 million PlayStation 2 and PlayStation 3 units. In the same quarter last year, the company sold 3.2 million.

Their handheld devices, the PSP and Vita, didn´t perform any better, selling only 1.4 million units. During the same quarter last year, Sony sold 1.8 million units. Sliding from 1.8 to 1.4 million units in a year may not seem like a huge loss, however Sony´s new flagship handheld, the Vita, had not been released during Q1 2011.

Though Sony´s numbers certainly aren´t great, it seems they may have sold more of their gaming consoles than rival Microsoft. During their Q4 earnings call last month, the Redmond company reported selling 1.1 million Xbox 360s, down by 39%.

Despite this loss, they were still reported as having the best-selling console in America. Could international PlayStation sales be behind Sony´s Microsoft-beating numbers?