Despite losing money on the back of lower sales during its fiscal second quarter, Sony said business was better than it had expected and has cut full year loss forecasts as a result.
Sales during the quarter, the period from July to September, were down 20 percent on the same period last year at ¥1.7 trillion (£11bn) and net losses were ¥26 billion (£172m), it said Friday. Last year during the same period it recorded a net profit of ¥21 billion (£140m).
More than half the losses were due to the strong Japanese yen, said Nobuyuki Oneda, Sony's chief financial officer, at a Tokyo news conference. The strong yen reduces the value of sales and profits made overseas and makes Sony's products less competitive overseas.
Sales were down due to the global recession, which started during the October to December quarter last year. The company blamed the drop into loss on restructuring charges, poor results at its mobile phone joint venture Sony Ericsson Mobile Communications and other affiliates, and the effects of the strong Japanese yen.
Of Sony's IT-related business groups, its consumer division was the only one to make a profit, although it was 87 percent down on last year. Sales in the division fell 36 percent led, by a decline in revenue from Bravia LCD TVs. During the quarter it sold 3.3 million of the TVs compared to 3.7 million in the same period last year. Sony put the lower sales down to price competition, primarily in the US and Europe.
Weaker demand for Cybershot digital cameras, which sold 5.2 million units during the quarter against 5.7 million a year earlier, also pushed down sales. Video camera sales were 1.3 million units, down from 1.5 million.
The network division, which includes Sony's PC and game console business, saw sales drop 24 percent and losses extend to ¥59 billion (£392m). Despite the launch of a new version of the PlayStation 3 console, overall game sales decreased due to lower sales of the PlayStation 2.
PlayStation 3 sales jumped from 2.4 million units to 3.2 million units, while PlayStation 2 sales fell from 2.5 million units a year ago to 1.9 million during the quarter. The PlayStation 2 is Sony's previous generation console but still sees demand because of the large number of games available and its low price.
Despite lower unit sales, Sony didn't downgrade full year sales forecasts for any of its key products. Most were kept unchanged, although it raised its DVD player sales target from 9 milllion to 11 million units and its Walkman digital music player target from 6.7 million units to 7 million.
"Because operating profits significantly improved on our expectations we have revised up our forecast," said Oneda.
Sony now expects full year losses to hit ¥95 billion (£631m), down from its July forecast of ¥120 billion (£798m). It left its sales forecast unchanged. However the company cut its research and development budget for the current year by 8 percent to ¥460 billion (£3bn). Sony will also reduce capital expenditure by 25 percent as previously announced.