Sony said that “growing sales and improving the profitability of the smartphone business are pressing issues”, as it reported an increased operating loss for its Mobile Products & Communications (MP&C) business, following its buy-out of Ericsson’s stake in the former Sony Ericsson handset joint venture.
However, much of this can be attributed to weakness in its PC business, which also falls into this segment.
MP&C saw an operating loss of JPY23.1 billion (US$289 million), compared with a prior-year loss of JPY6.1 billion, on sales of JPY300.4 billion, more than doubled from JPY141.7 billion following the acquisition.
Sony’s numbers reveal that during the quarter to 30 September, it shipped 8.8 million smartphones, up from 7.4 million in the prior sequential quarter.
Since fully consolidating the business in February 2012 it has “started the realignment of the [mobile] business”, with the intention of bringing attractive products to market more quickly, streamlining its supply chain management, and strengthening its product development and operational capabilities.
It has also begun transferring headquarters functions to Tokyo, and has been cutting its workforce and “realigning its global operational structure”.
In a presentation, it noted that “had Sony Mobile been fully consolidated in the same quarter in the previous fiscal year, segment sales would have been essentially flat and segment operating loss would have been approximately JPY10 billion”.
Sales from its handset business have been coupled with “significantly lower sales of PCs”, as the result of falling unit shipments. The performance of the mobile phone unit has benefited from higher average selling prices, as the portfolio has shifted to smartphones from feature phones.
In addition to the poorer performance of the PC unit, the MP&C operating loss was also attributed to “the impact associated with the consolidation of Sony Mobile as a wholly-owned subsidiary, including incremental intangible asset amortisation and certain royalty adjustments”.
Looking forward, Sony said that it expects full-year mobile segment sales to be lower than it had previously suggested, primarily due to the lowering of its annual sales forecasts for PCs.
For the full year, it is forecasting smartphone shipments of 34 million units, up from 22.5 million in the last financial year.
It said: “On a pro forma basis, had Sony Mobile been fully consolidated from the beginning of the previous fiscal year, a significant increase in sales and a significant improvement in operating results would be anticipated”.
On a group level, the company reported a second-quarter loss of JPY15.5 billion, down from JPY27 billion in the prior year, on sales of JPY1.6 trillion, up 1.9 percent from JPY1.58 trillion.