updated 04:25 pm EDT, Tue July 29, 2008
Sony Blames Loss on Phones
Sony today reported that its profit had dropped approximately 47 percent in the spring quarter versus the same quarter a year ago, representing one of the company's steeper drops in recent history. The Japanese company chiefly attributes the company-controlled aspects of the shortfall to poor Sony Ericsson results, which saw the company's cellphone sales virtually flatten as customers turned away from its mid-range and high-end phones, which target the same camera and music fields as devices like Apple's iPhone, LG's Viewty, and Nokia's Nseries.
Sony Ericsson isn't expected to see a significant turnaround until late in the year, when its Windows Mobile-based XPERIA X1 smartphone launches and gives the company greater influence over high-end users.
The company also says its sales would have improved if it had produced a high-profile movie or if a stronger Yen versus the US dollar hadn't hurt finances. Its music label partnership, Sony BMG, also swung to a loss versus spring 2007 in an industry which has yet to fully compensate falling CD sales with a surge in downloadable music.
Sony nonetheless said it was in the midst of a turnaround spurred in part by the Computer Entertainment division, which produces the PlayStation line. The group said it has flipped from loss to profit after enduring losses for most of the past several quarters stemming from poor PlayStation 3 sales, which incur a loss on each unit as the company sells below cost to compete against Microsoft. The Blu-ray game system sold more than twice as many units in the spring, pushing to nearly 1.6 million consoles.
Most observers believe the spike is based largely on the launch of high-profile games like GT5 Prologue and Metal Gear Solid 4 as well as the end of the rivalry between Blu-ray and HD DVD, which has persuaded more users to buy Sony's console for movies.