Sony loses $8m on games as overall business cuts forecast by 40%
Exchange rates hide some of the story as corp prepares for Q3/4
Sony's games business has managed to raise its quarterly revenues slightly year-on-year, but only thanks to the continuing crash of the Yen against both Dollar and Euro.
Global takings for the division for the quarter ending September 31, 2013 were ¥155.7 billion ($1.588bn) as opposed to ¥148.2 billion for the same quarter one year ago. However, that 5.1 per cent gain quickly turns into a 14 per cent downturn when calculated on a constant currency basis.
On either terms, that means an operating loss for games of ¥0.8 billion or $8 million for the three-month period, compared to a positive income of ¥2.3 billion a year prior to that.
"The decrease in sales on a constant currency basis was primarily due to a decrease in unit sales of PlayStation 2, PlayStation 3 and PSP hardware, partially offset by increased PS3 software unit sales compared to the same quarter of the previous fiscal year," the accompanying report reads.
Oddly, Sony's report also highlights the shifting financial market as a cause of lower operating income, despite a weaker Yen having a positive effect on non-domestic sales.
"Operating loss of 0.8 billion yen (8 million U.S. dollars) was recorded, compared to operating income of 2.3 billion yen in the same quarter of the previous fiscal year. This year-on-year decline was primarily due to the impact of a strategic price reduction for the PlayStation Vita and the unfavorable impact of foreign exchange rates, partially offset by the above-mentioned increase in software unit sales."
Elsewhere in the report, R&D costs for the PS4 are brought to bear, but remain unspecified. "In the Game segment, operating loss significantly increased year-on-year primarily due to an increase in research and development expenses related to the upcoming introduction of the PlayStation 4 and the impact of a strategic price reduction for the PS Vita."
Half year figures are more revealing, with Sony publishing the bottom line impact of the currency movements. Sales for the first half of FY2012 were ¥266.1 billion, increasing 2.8 per cent to ¥273.6 billion for the first six months of FY2013. Nonetheless, that's a shift from an operating loss of ¥1.3 billion to a loss of ¥15.6 billion over the same period: a 15 per cent drop in constant currency terms. To add insult to injury, those financial changes effectively added an extra ¥47.1 billion to Sony's coffers, as you can see from slide five here.
Sony's games forecast for the next quarter and the full year remain unchanged from the August report, in both operating income and sales figures, but the outlook for the rest of the business has been revised downward drastically. There's a 2.5 per cent cut to the expectations of company-wide sales for the full year, from ¥7,900 billion to ¥7,700 billion, cascading to a 26.1 per cent reduction in the forecast for operating income and a huge 40 per cent cut in predicted net profits for shareholders. That would mean a share of a ¥30 billion overall profit for the corporation, rather than the ¥50 billion forecast in August's report.
Sony Pictures is a one of the major culprits, with underperforming cinema titles and a reduction in TV optioning contrasting sharply with some major box-office successes in the previous year. Nonetheless, whilst sales in every segment other than Games and Music are expected to be below August's expectations, nearly every department is still predicting a rise in both raw sales and operating income, year-on-year.