Sony Posts Impressive Profit, but Loeb Not Satisfied

Sales and operating revenue were 1,712.7 billion yen (17,300 million U.S. dollars), an increase of 13.0% compared to the same quarter of the previous fiscal year (“year-on-year”). This increase was primarily due to the favorable impact of foreign exchange rates, an increase in financial services revenue, and an increase in unit sales of smartphones. On a constant currency basis, sales decreased 3% year-on-year.

And:

Operating income increased 30.1 billion yen year-on-year to 36.4 billion yen (367 million U.S. dollars). This improvement was primarily due to a significant improvement in the Mobile Products & Communications (“MP&C”) segment reflecting strong smartphone sales, and significantly higher operating income in the Financial Services segment, as well as the favorable impact of foreign exchange rate

Sony is considered an also-ran in smartphones, so it can consider its results in that division a major “win.”

Sales of digital cameras plunged, which brought down sales in that division by 10%. Sony still competes with far too many companies in this business, the products have become commodities and many smartphones have adequate cameras for most needs.

In the game division, revenue was flat. PlayStation products are still pressed in unit sales and price by Microsoft Corp. (NASDAQ: MSFT) Xbox and Nintendo products.

Motion picture and studio sales were higher by 3% because of the success of “Men in Black 3.”

The huge winner among the Sony divisions was its financial services arm:

Financial services revenue increased 29.9% year-on-year to 252.7 billion yen (2,553 million U.S. dollars) primarily due to a significant increase in revenue at Sony Life. Revenue at Sony Life increased 31.9% year-on-year to 223.0 billion yen (2,252 million U.S. dollars). This increase was primarily due to significantly improved investment performance in the separate account reflecting the fact that there was a significant rise in the Japanese stock market during the current quarter, as compared with a significant decline in the same quarter of the previous fiscal year.

As for Loeb’s opinion, which is right, Sony is still a collection of mostly unrelated operations that have no business being tied together.