Japanese technology giant Sony has today reported its third quarterly earnings and they’re bleaker than one would’ve expected. Though the PlayStation business showed healthy growth, it was offset by massive losses in the film business division. The company reported an overall 84 percent decrement in profit figures for the quarter ended in December’16.
In the said fiscal quarter, the company posted a profit of 19.6 billion yen (approx $174 million) alongside massive 2,397.5 billion yen (approx $20.7 billion) in revenues. This accounts for a seven percent drop in revenues as compared to the same quarter previous year. The profit, on the other hand, sank more than 84 percent on a year-on-year basis due to adverse foreign currency rates and nearly a billion dollar ‘goodwill impairment’ charges levied on Sony Pictures. Quarterly sales for this quarter also dipped 7 percent to 2.4 trillion yen (approx $21.3 billion).
These charges for the film business were announced earlier this week. And they amounted to 112.1 billion yen (approx $9.96 billion) in Q3 ended December 31, 2016. Most of the goodwill that has been impaired was recorded at the time of the acquisition of Columbia Pictures in 1989. A minor improvement was seen in the Q3 profit figures that were partly due to the success of “Spectre,” a James Bond film and “Hotel Transylvania,” an animation film about Dracula.
Due to the impairment, Sony has now lowered its full-year profit expectations to 196 billion yen (approx $1.7 billion), which is a 22 percent reduction. The revenue forecast for the complete year has, however, been increased by 3 percent. Also, chief executive Kazuo Hirai will also oversee the movie business through another office in California.
Now, the other sore spot in today’s quarterly earnings is the Mobile Communications business. It is also one of the prominent sources of the losses that’ve been recorded in Q3. The smartphone business reported a total loss of $544 million, due to Sony’s revised focus on mid-range devices and competitive markets. For this cost-cutting, the business also carded a 21.2 billion yen (approx $183 million) operating profit on revenues that were down 35 percent.
Sony’s gaming division and VR efforts helped the company stay afloat. The PS4 game software and machine sales along with a contribution from its Virtual Reality headset. This division posted a 25 percent increase in operating profit on five percent revenue increase, amounting to 617.7 billion yen (approx $5.3 billion). The home entertainment business, on the other hand, posted revenues of 353.4 billion yen ($3 billion).
Additionally, the company is now expecting a profit of 26 billion yen (approx $231 million) in the quarter ended March 2017 as compared to the previous projection of 60 billion yen (approx $532 million).