Sony Corporation just posted its financial results for the third quarter of the fiscal year 2014, related to the period between September 1st and December 31st. Interestingly, and maybe unexpectedly, all the figures for both the gaming business and the corporation as a whole are in the positive black. The only area of the business in the red was the Pictures segment.
We learn that the house of PlayStation sold 6.4 Million PS4 and 1.1 million PS3, on top of 1.4 Million portable consoles during the quarter. Software sales reached 147 billion yen, while network sales were 100 billion yen.
Below you can see the figures for the company as a a whole, and for the Game & Network Services segment of the business, which includes Sony Computer Entertainment.
It’s worth mentioning that the figures are marked as “forecast,” as Sony had to delay the final results due to the Sony Pictures hack in December, but still opted to give approximate figures on the scheduled date to keep investors up to date.
Sales and operating revenue (“Sales”) are expected to be 2,557.8 billion yen (21,139 million U.S. dollars), an increase of 6.1% compared to the same quarter of the previous fiscal year (“year-on-year”). This increase is primarily due to the favorable impact of foreign exchange rates, a significant increase in Mobile Communications (“MC”) segment sales reflecting an increase in unit sales of smartphones, a significant increase in Devices segment sales due to the strong performance of image sensors, and a significant increase in Game & Network Services (“G&NS”) segment sales reflecting the strong performance of PlayStation 4 (“PS4”). This increase is expected to be partially offset by a significant decrease in sales in All Other, primarily related to Sony’s exit from the PC business, and a significant decrease in sales in the Pictures segment, mainly due to lower Motion Pictures and Television Productions sales. On a constant currency basis, sales are expected to decrease by 1% year-on-year.
Operating income is expected to increase 89.4 billion yen year-on-year to 178.3 billion yen (1,474 million U.S. dollars). This significant increase is expected primarily due to a significant improvement in the operating results of the Devices, Home Entertainment & Sound (“HE&S”), G&NS, and Imaging Products & Solutions (“IP&S”) segments. This improvement is expected to be partially offset by a significant decrease in operating income in the Pictures segment. Operating income in the current quarter includes an 11.2 billion yen (93 million U.S dollars) write-down of PlayStation®Vita (“PS Vita”) and PlayStation TV (“PS TV”) components in the G&NS segment. In the same quarter of the previous fiscal year, a 32.1 billion yen impairment charge related to long-lived assets in the battery business in the Devices segment and a 6.2 billion yen write-off of certain PC software titles in the G&NS segment were recorded. During the current quarter, restructuring charges, net, are expected to decrease 4.6 billion yen year-on-year to 9.0 billion yen (75 million U.S. dollars). PC exit costs decreased 6.1 billion yen year-on-year to 4.9 billion yen (41 million U.S. dollars) which includes 1.4 billion yen (11 million U.S. dollars) of restructuring charges.
Sales increased 16.8% year-on-year (an 8% increase on a constant currency basis) to 531.5 billion yen (4,393 million U.S. dollars). This significant increase was primarily due to an increase in PS4 hardware unit sales, the favorable impact of foreign exchange rates and a significant increase in network services revenue, partially offset by a decrease in PlayStation®3 (“PS3”) hardware and PS3 software sales. Sales to external customers increased 19.7% year-on-year.
Operating income increased 15.2 billion yen year-on-year to 27.6 billion yen (228 million U.S. dollars). This significant increase was primarily due to the impact of the above-mentioned increase in sales, partially offset by the impact of the decrease in PS3 software sales, the unfavorable impact of the appreciation of the U.S. dollar reflecting the high ratio of U.S. dollar-denominated costs, as well as the recording of an 11.2 billion yen (93 million U.S. dollars) write-down of PS Vita and PS TV components. This write-down was recorded because the latest forecast of PS TV unit sales does not reach our original forecast as a result of lower than expected unit sales in the current quarter. In the same quarter of the previous fiscal year, a 6.2 billion yen write-off of certain PC software titles was recorded.
Most interestingly, Sony also posted a revised forecast for the full fiscal year 2014, reducing the losses predicted for the whole business, and increasing the forecast for the Game & Network Services segment by 7%.
The forecast for home console sales was also raised from the previous 17 million to 17.5 million units, while the prediction for software sales increased from 390 billion yen to 420 billion yen. The forecast for portable consoles remains unchanged from October.
Sales are expected to be higher than the October forecast primarily due to an expected increase in unit sales of the PS4, an expected increase in network services revenue and the favorable impact of foreign exchange rates. Operating income is expected to be above the October forecast primarily due to the above-mentioned increase in sales, partially offset by the unfavorable impact of the appreciation of the U.S. dollar, reflecting the high ratio of U.S. dollar-denominated costs in the segment.