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Sony's Profits Up Due To Cost Cutting Measures

Sony Computer Entertainment

This week Sony posted operating profits of between 10 billion and 30 billion yen for the April through June quarter, a huge improvement over last year's loss of 25.7 billion yen during the same period. The company has shown a lot more strength this year, and according the Japanese publication Nikkei, it's very much due to their electronics and PlayStation divisions.

Sony's previous fiscal year ended March 31st, and showed some surprising results. Even with a sales and operating revenue figure of 7,214 billion yen, the company still posted a -6.7% loss for the year. ¥40 billion of that total is attributed to their stockholders alone. However, the real damage was done by Sony's operating income losses from 2009 ( a staggering 227.8 billion yen!) that have set the company up for some desperate reorganizing.

Under the direction of Sir Howard Stringer, the firm's first non-Japanese leader, Sony is realigning its business and shedding some longtime traditions in its effort to right the Sony mother ship. This quarter, the company benefited from a lot more sales in China, which helped pull Sony out of its slump. Added to the success of their new SLR camera models, and their usual strong performance in LCD television sales, it turned out to be quite a boost.

The real shot in the arm for the company, however, came from the mobile division of their PlayStation department. With only slightly higher sales figures, this often dead weight seemed to show an increased profit margin only due to the many cost cutting procedures implemented recently.

With rumors of a Sony Ericsson PSP phone left behind last February, and a rumored 2011 Tokyo Game Show launch announcement of the PSP2 on the horizon, Sony's Mobile division has been looking a bit sketchy when compared to the much stronger home console division.

Personally, I wouldn't even flinch if Sony decided to drop out of the handheld console market if the PSP2 flops. They just can't compete with the value and software support of Nintendo's DS family of handhelds -- especially the new technology Nintendo is implementing in the 3DS.

Are you surprised by Sony's profitability? What do you think about the PSP2's chances for success?

The Japanese language Nikkei report can be found here (free registration required).

Source: CVG Online

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