Without PlayStation 4, Sony Has Problems

A weaker yen compared to both the dollar and the euro contributed to the company’s 5.8% rise in revenues and doubling of operating income. In the period, the yen weakened by 3.4% compared with the dollar and by 8% compared with the euro. On a constant currency basis, sales improved 3% year-over-year.

But the big difference maker for Sony was the success of PlayStation 4. The company’s games and network services segment saw revenues rise 95.7% to $2.55 billion virtually entirely due to PS4 hardware sales. Sony posted operating income of $43 million in the segment for the quarter, compared with a loss of around $162 million in the year-ago quarter.

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Sony Pictures posted a 22.6% jump in revenues to $1.93 billion, and operating income more than doubled to $78 million. “The Amazing Spider-Man 2” and “22 Jump Street” were singled out as being particularly strong revenue drivers.

Sony Music boosted revenues by 4.4% to $1.16 billion and saw operating revenues rise by 5.7% to $113 million. Publishing, visual media, and platform sales rose while sales of recorded music (CDs) declined.

For the 2015 fiscal year, Sony forecasts a 0.4% increase in sales and a net loss of 50 billion yen (about $485 million), compared with a loss of around $1.27 billion in the fiscal year that ended in March. The company expects to sell fewer smartphones and more PS4s, but the overall revenue and operating income totals remain the same as the May forecast: approximately $75.78 billion in full-year revenue and operating income of $1.36 billion.

Sony is planning a spin-off of its TV business into a separate company and to cut 5,000 jobs.

The company’s CFO noted that Sony often beats its first-quarter targets but fails to meet full-year targets. He was encouraged by the results, but said, “I want to see how the rest of the year goes.” He is not alone.

Sony’s shares traded up about 2.7% in the premarket on Thursday, at $18.00 in a 52-week range of $15.23 to $22.25. The consensus estimate (only two analysts) from Thomson Reuters sets a price target of about $21.50 on the shares.

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