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PS4 boosts SCE op. profit 290 per cent in Q3

PS4 boosts SCE op. profit 290 per cent in Q3

Thu 06 Feb 2014 9:31am GMT / 4:31am EST / 1:31am PST
HardwarePublishingDevelopment

But sale of PC business and changes in TV division will see another 5000 people lose their jobs

Sony Computer Entertainment

Sony Computer Entertainment is a Japanese videogame company specialising in a variety of areas in the...

playstation.com

The PlayStation 4's success finally registered on Sony's bottom line, with its Game business showing a 290 per cent increase in operating income.

In the quarter ended December 31, 2013, Sony's Game division made 442 billion ($4.2 billion), a 64 per cent increase over the 268.5 billion it made the previous year. Sony was also helped by depreciation of the Yen; on a constant currency basis, its Game revenue only climbed 33 per cent.

Operating income for the unit rose 292 per cent to reach 18 billion ($172 million) - partially offset by costs associated with the launch of the PlayStation 4, and a write-down of 6.2 billion ($59 million) relating to a clutch of SOE games that were sunsetted recently.

Sony only offered consolidated sales numbers for its hardware and software, rolling PS2, PS3 and PS4 unit sales into one amount. In the third fiscal quarter, ended December 31, its home consoles sold a combined 7.8 million units, up from 6.8 million the prior year.

And given that the PlayStation 4 had sold 4.2 million by December 28, it can be reasonably estimated that the PS2 and PS3 sold a maximum of 3.6 million units in the quarter - down from 6.8 million in the previous year.

Handheld sales were less encouraging, with the Vita and PSP selling a combined 2 million units - down from 2.7 million sales the previous year.

Across all platforms, Sony earned 126 billion from software sales in the third fiscal quarter - up from 84 billion the previous year.

The performance of Sony's Game business lifted the company as a whole. Sony earned 2.4 trillion ($22.9 billion) in the third quarter, a year-on-year rise of 23.9 per cent. However, the cost of running the company remained high, with just 27 billion ($257 million) of that amount returning as net profit - up from a loss of 10.8 billion ($106 million) the previous year.

Sony has been attempting to reduce costs through downsizing and restructuring initiatives since at least 2011, and the company announced that the latest step would be to sell its Vaio PC business to Japan Industrial Partners Inc. (JIP) as it focuses on smartphones and tablets. Sony expects between 250 and 300 of its existing staff to be employed by JIP.

However, while Sony did not give a specific estimate for redundancies from the Vaio sale, its other business activities will add significantly to that number. By July this year, the company's struggling TV business will become a wholly-owned subsidiary focused on the high-end 4K market - where Sony has a 75 per cent market share - and new hardware tailored to the needs of specific emerging markets.

The changes in its TV and PC businesses will have a huge impact on its manufacturing, sales and support staff, with around 5000 people expected to lose their jobs by the end of fiscal 2014 - 1500 in Japan, and a further 3500 worldwide.

6 Comments

So - $250m Net Profit - what was the operating profit? Its unfortunate how the currency fluctuations affect these numbers so strongly.

I am a little surprised about those hardware numbers: even with the PS4 launch, its effectively flat YOY: 1m consoles, but almost 1m less handhelds.

With Xmas and launch over, really interested to see how the next couple of quarters turn out. They have the Japan launch of course.

Posted:6 months ago

#1

Daniel Hughes
Studying PhD Literary Modernism

436 496 1.1
Sad to see so many more people will be losing their jobs, but Sony have obviously been too large and unwieldy to adopt to changes in the markets in which they compete. On track for a full year $1.1 billion loss, which is quite the reversal given they expected a decent profit this year. Vita is also performing terribly, and even with PS4 being such a bright spot, without further job losses and division closures that's not going to be enough to turn Sony around. A sad situation for those who have been let go and will now be let go, I wish them all the best.

Posted:6 months ago

#2

Nicholas Pantazis
Senior Editor

1,017 1,463 1.4
That's a lot of jobs. That's as many people as Nintendo employs as an entire company. Sony had to do this though. PCs have been bleeding them for years, as are TVs, though they don't seem completely ready to admit it yet. Turning Bravia into a wholly owned subsidiary lets them pretend they still have interest in keeping it so as not to shock investors into stock dumping, while preparing it for an easier sale two years down the line.

Great to see PlayStation profitable, but they have to do something about the Vita. Cancel it or cut the price by 30% (and pack it with a giant memory card). At the current sales level it will sell less than the (very poorly performing) Wii U.

Posted:6 months ago

#3

Andrew Ihegbu
Studying Bsc Commercial Music

440 146 0.3
You can increase profits all you want, but ultimately for the one company that just got $290m richer (pre tax and so on), 5 thousand people just lost the shirts on their backs.

Profit really is starting to become a dirty word to me. If you're pulling a profit like that you would still make a profit without the layoffs provided that you weren't paying more than $50k per employee and actually had a decent product line to sell.

Posted:6 months ago

#4

Andy Samson
QA Supervisor

231 178 0.8
The really sad thing about this news is when people see Nintendo get a paper cut they'll cry out it's dying. But when SONY loses a finger they quickly shrug it off as irrelevant.

Posted:6 months ago

#5
@Andy: I think that's only because Sony has been in big, big trouble for years - and across most of their divisions.

Sony making a profit, is like Nintendo making a loss. Although the latter is becoming far too regular as well.

Posted:6 months ago

#6

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