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Sony lifts operating income forecast into the black

Sony CFO Kenichiro Yoshida speaks at the earnings event.

TOKYO -- Sony now expects to earn an operating profit this fiscal year as its television business finally starts making money again and other segments outshine expectations.

     The Japanese company projected Wednesday a profit of 20 billion yen ($168 million) for the year through March 31, compared with its earlier forecast of a 40 billion yen loss. It had posted a 26.5 billion yen profit for the previous year.

     "Structural reforms to stop the bleeding have gone smoothly, and we will press ahead with necessary streamlining next fiscal year and afterward," Chief Financial Officer Kenichiro Yoshida told a news conference, indicating that major restructuring efforts will wind down this fiscal year.

Segments looking up

Its eight businesses, except for smartphones and movies, are seen logging better operating incomes than expected. All but smartphones will likely improve from the previous year.

     The TV business, spun off last July, is seen making money for the first time in 11 years. It is expected to log an operating profit of 13 billion yen, an about-face from last year's 25.5 billion yen loss. In addition to cutting fixed costs, this segment has enjoyed brisk sales of 4K and other high-value-added products.

     Operations in electronic components -- including image sensors, where Sony is the global leader -- and games are driving earnings.

     The electronic components business is expected to log a record operating profit of 100 billion yen, up from the previously projected 67 billion yen, thanks to stronger sales of sensors for smartphones and tablets.

     Meanwhile, the games business is seen beating an earlier projection by 5 billion yen on strong sales of the PlayStation 4 console.

     Overall sales are expected to grow 3% to 8 trillion yen, topping an earlier forecast by 200 billion yen. Thanks to structural reforms, higher sales lead more directly to higher profits. But Sony will still bleed red ink. It expects to post a net loss of 170 billion yen, 60 billion yen less than the previous projection.

Smartening up on phones

Sony will eliminate more jobs in its smartphone business. It announced plans Wednesday to shed a total of 2,100 workers in the struggling segment by the end of next fiscal year, incurring some 30 billion yen in restructuring expenses.

     The company also set a new target for the business. It aims for sales of 900 billion yen to 1.1 trillion yen and an operating profit margin of 3-5% for the year ending March 2018. While the sales goal falls short of this fiscal year's 1.32 trillion yen target, a Sony executive said the company will press ahead with restructuring efforts and prioritize profits over volume.

     "The company's operating profit target of 400 billion yen next fiscal year has become more realistic," said Eiichi Katayama of Merrill Lynch Japan Securities.

(Nikkei)

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