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Stocks

Sony shares hit 18-month high on electronics turnaround

Panasonic slides despite profit outlook upgrade

TOKYO -- Shares of Sony surged on Friday in Tokyo trading, hitting an 18-month high after the Japanese electronics maker's latest earnings report highlighted the resurrection of its electronics segment.

The shares rose as much as 6.8% in morning trading to 3,600 yen, the highest since July 2015. The company expects 26 billion yen ($230 million) in net profit for the fiscal year ending in March, an 80% decline from the previous year, due to a massive write-down in its motion pictures segment, it said after the close of trading on Thursday. But investors were buoyed by a turnaround in Sony's electronics business.

Kenichiro Yoshida, Sony's chief financial officer, discusses the company's disappointing earnings picture Feb. 2.

The company's semiconductor business improved thanks to surging demand for smartphone image sensors, and an estimated 53 billion yen loss that was feared following last April's earthquakes in southern Japan has now narrowed to 19 billion yen. Monthly production capacity stands at 85,000 units, and Sony said it will churn out more than 80,000 units a month in the January-March quarter.

The television segment will reverse course and log a profit gain, thanks to its highly profitable 4K high-resolution TVs. The electronics business, including gaming systems and smartphones, is expected to generate 166 billion yen in profit, up 40% from the previous fiscal year.

Meanwhile, shares in Panasonic, which released an upbeat earnings report on Thursday, fell steeply in morning trading, declining as much as 2.7% to a two-month low. The shares have since reversed their losses.

Panasonic upgraded its full-year earnings estimate Feb. 2.

The company said on Thursday that its consolidated net profit outlook for fiscal 2016 was upgraded by 10 billion yen to 130 billion yen, due to a weaker Japanese currency. However, investors worried about an announcement from the company that its avionics segment is being probed by the U.S. Department of Justice and the Securities and Exchange Commission.

"Panasonic has been cooperating with the authorities, and has recently engaged in discussion with the DOJ and SEC with a view towards resolving the matter," it said in a statement.

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