Sony Q4 FY12 Earnings: ‘Essentially Flat’ in Game Sector

The consensus is that the game industry is facing a slump. Yet even so, Sony’s latest financial results for the fiscal year ended March 31, 2013, show that the electronics giant has posted its first net profit in five years.

Highlights:

  • Sony’s annual sales and operating revenue was 43 billion yen (~$434 million)
  • Game operating income saw a large decrease from 27.6 billion yen to 1.7 billion yen
  • PlayStation 3 saw an increase in software and hardware sales, offset by a decrease in PS Vita hardware sales
  • The company is not expecting a major loss with the launch of the Playstation 4
  • Sony expects to sell 5 million units for PS Vita and PSP combined in FY13
  • Recovery of the company is expected to continue through the next year

Sony is reported earnings of 43 billion yen (~$434 million) following four years of losses. According to the company, last year’s loss of 457 billion yen (~$5.7b) was the worst loss its company had seen in 66 years.

Despite posting its profits, Sony’s game operating income saw a decrease of 27.6 billion yen (~$279 million) to a mere 1.7 billion yen (~$18 million), largely due to the decrease in sales of PlayStation Portable hardware and software sales, and a recent price reduction of PS Vita devices, enacted in Japan in February 2013.

According to Sony, operating income for its the games sector is expected to be “essentially flat” in the fiscal year ending March 31, 2014, despite the introduction of the PlayStation 4. The company attributes this to an increase in research and development expenses and marketing expenses related to the release of the new platform, offset by the impact of the aforementioned increase in sales.

“Unlike PS3, we are not planning a major loss to be incurred with the launch of PS4,” Sony CFO Masaru Kato said. “At the time we developed PS3, we made a lot of in-house investments to develop the chip, the Cell chip. Development of the chip saw the silicon processing and all the facilities invested by us ourselves. But this time, yes we have a team working on chip development, but we already have existing technology to incorporate and also product investment and all the facilities will now be invested by our partners, other foundries, so we don’t have to make all the investment in-house.”

Sony posted combined sales of 16.5 million units for its PlayStation 3 and PlayStation 2 over the fiscal year, followed by a total of 7 million units for the its portable systems, the PSP and the PS Vita. In revising their goals, the company expects to sell 5 million units for the PS Vita and PSP combined this fiscal year, while the PlayStation 3 is expected to sell another 10 million units over the same period. Sony did not announce how many units it expects to sell for the PlayStation 4.

Despite the slump in PS Vita sales, Sony expects its recovery will continue through to next fiscal year.

Source: Sony

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