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Sony's operating profit triples to record for April-June

Better-than-expected results reinforce expectations of revival

CEO Kazuo Hirai is leading Sony 's efforts to reinvent its brand.

TOKYO -- Sony seems to be remastering not just how to make stuff consumers want to buy but how to make money as well.

For the April-June quarter, Sony's operating profit nearly tripled from a year before to 157.6 billion yen ($1.43 billion), a record for the first quarter.

With three quarters to go in the fiscal year, Sony is already about a third of the way to its target of 500 billion yen in operating profit, which would be the highest in 20 years.

The semiconductor business was the biggest contributor to the earnings, turning from a year-earlier loss of 43.5 billion yen to a profit of 55.4 billion yen. Sony is the world's biggest supplier of image sensors for digital cameras and smartphones, such as those sold by Apple and Samsung Electronics.

The upbeat result is likely to lend credence to CEO Kazuo Hirai's talk that Sony, after years of disarray, is now back in the game.

First-quarter sales jumped 15 percent to 1.85 trillion yen, prompting the electronics giant to raise its sales forecast for the year to 8.3 trillion yen from 8 trillion yen.

The results are bound to please investors, who last week drove Sony's shares to a year-to-date high, betting that annual operating profit will eclipse the record 525 billion yen marked in fiscal 1997.

Quarterly operating profit easily topped a consensus estimate of 133 billion yen.

Sony executives are cautioning themselves against complacency, however.

"Whenever we produced good results in the past, a sharp pullback followed," said Kenichiro Yoshida, chief financial officer and the right-hand man of CEO Hirai. "To achieve our profit target, a sense of tension must be maintained."

Indeed, hitting the annual operating profit target is only the first step toward the ultimate goal of putting the company's boom-and-bust culture behind and producing steadier earnings. The company has posted losses in six of the past 10 years. Its market capitalization is still less than half of its 2000 peak.

Hirai took over in April 2012 after a disastrous fiscal 2011 that saw the company post a net loss of 456.6 billion yen. He laid out a three-year plan to lift the operating profit to 500 billion yen by 2017.

During the April-June quarter, Sony's semiconductor business offset a 60% drop in operating profit for the PlayStation business.

Sony cut the price for its popular PlayStation 4 game console the previous fiscal year, denting both sales and profit margin.

Worldwide sales of the PlayStation 4, released in 2013, totaled 3.3 million units in the first quarter, down from 3.5 million a year earlier. Sony said it is on course to achieve a sales target of 18 million for the year through March.

The profitability of the game business is expected to improve in the second half of the business year as more titles get released, Sony said.

Meanwhile, the PlayStation Network now has 70 million monthly subscribers, giving Sony a steady revenue stream.

Sony has been trying to diversify its revenue sources, and the quarter saw most divisions -- music, mobile phone, TV, camera -- post profits. The movie business was the only exception, losing 9.5 billion yen, against a year-earlier loss of 10.6 billion yen.

Sony expects semiconductors to continue to be a cash cow, as demand for image sensors will grow with improving smartphone specifications.

"The volume of smartphone shipments may not grow," Yoshida said, "but the quality of smartphones will continue to improve as they become an essential piece of social infrastructure in countries like China."

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