This summary is based on the first quarter fiscal 2007 earnings call conducted by Sony Corp. (SNE) on July 26, 2007.
Management:
CEO, Executive VP, and CFO: Nobuyuki Oneda
Senior VP, Investor Relations: Sam Levenson,
EVP and CFO, Group Executive: Robert Wiesenthal
Key investor issues:
Consolidated sales, operating income and net income all achieved new records for the first quarter.
- Consolidated sales increased 13% to 1,976.5 billion yen due to the large increase of sales of all segments.
- Consolidated operating income rose to 99.3 billion yen from 27 billion yen a year ago.
- Restructuring charges amounted to 3.4 billion yen vs. 10.7 billion yen last year.
Non-operating income deteriorated 42.5 billion yen to a 15.6 billion yen loss, due to a 21.5 billion yen swing from a foreign currency exchange gain to a loss.
- Equity and net income of affiliated companies increased 18.3 billion yen year-on-year to 22 billion yen.
- Net profit in the fiscal first quarter rose to 66.5 billion yen, compared with 32.3 billion yen a year earlier.
- Full-year profit forecast of 320 billion yen remains unchanged.
Segment Results
Sales in the electronics segment increased 12%, or 4% on a local currency basis.
- Sales to outside customers increased 7%, due to strong sales of digital cameras, Bravia LCD TV’s, and video cameras.
- Operating income in electronics increased 77%. The largest profit contributing products were digital cameras, video cameras, image sensors, and PCs, while the largest loss making products were LCD TV’s and LCD rear projection TV’s.
- The overall sales in the TV category were approximately 235 billion yen, a decrease of 10% year-on-year.
- Operating loss was roughly 39 billion yen, a decrease of 28 billion yen from a year ago.
Sales in the semi-conductor segment for the fiscal year were approximately 155 billion yen, an increase of 41% year-over-year.
- Operating income was approximately 8 billion yen.
- Sales and profit increased due to sales of chips for the PS3.
- Sony Ericsson’s sales jumped 37% to 3,112 million euros.
Sony recorded 17.7 billion yen of equity and net income from the venture, an increase of 7.5 billion yen.
- Unit sales rose 59% to 24.9 million.
- Sony Ericsson’s market share increased three percentage points to over 9%.
Sales in the game segment increased 60%, or 49% on a local currency basis.
- Approximately 70% of sales came from hardware and accessories, and the balance from software.
- PS2 recorded an increase in sales. PSP hardware sales increased due to a significant increase in unit sales year-on-year. PS3 sales came in slightly below expectations.
PS2 software sales advanced.
- Despite an increase in unit sales, PSP software revenues decreased.
- Sony plans to enhance its PS3 software lineup.
- Operating loss in the game segment increased 2.4 billion yen to 29.2 billion yen.
Sales forecast remains unchanged.
- Software unit sales are expected to be 250 million units.
- PS2 hardware unit sales are expected to be 10 million units;
- PSP hardware unit sales are expected to be 9 million units;
- PS3 hardware unit sales are expected to be 11 million units.
Sales in the pictures segment increased 13% from a year ago, or 7% on a U.S. dollar basis.
Operating income increased to 3.3 billion yen, compared to an operating loss of 1.2 billion yen in the same period last year. The sales increase was mainly attributed to the highly successful theatrical performance worldwide of Spiderman 3, combined with growth in advertising revenues for several of Sony Picture Entertainment’s international channels.
