Sony Bucks Predictions as Profit Rises 68%

Sony, the Japanese electronics maker that owns CBS Records and Columbia Pictures, defied analysts’ expectations Tuesday and reported higher six-month results amid booming sales overseas.

Net income for Sony and its consolidated subsidiaries totaled about $340 million (49.06 billion yen), up from about $202 million (29.18 billion yen) a year earlier.

Sales rose to $8.51 billion (1.229 trillion yen), up 23.8% from $6.88 billion (992.260 billion yen) in the comparable year-earlier period.

Domestic sales continued to make up the largest part of Sony’s overall sales in the six months. But despite booming personal spending in Japan, Sony marked up its strongest sales gains overseas, particularly in Europe.

European sales jumped 30.3% from a year earlier while sales in the United States climbed 26.5%. Sales inside Japan increased a more moderate 16%. Sales of recordings by Sony’s subsidiary CBS Records Inc. rose 18.8%.

“They are good numbers,” said industry analyst Darrel Whitten at Prudential-Bache Securities (Japan). “Sony is strategically the best-placed company to maximize growth with the combination of hardware and software markets,” he said.

“The environment for consumer electronics is not like it was two years ago and despite that they have done well,” said senior analyst Virginia Kouyoumdjian at Baring Securities (Japan). “The company is in the right areas.

“It is the only company that has completely integrated operations that will be able to market entertainment software and hardware together.”

Sony is especially strong in compact discs and came out with the only innovative product in the audio area this year, the “Pixie,” a high performing mini-stereo that can be stacked, lined up or put on a shelf.

The maker of the Walkman personal stereo moved into the booming record business by purchasing CBS Records in 1988. “CBS has been bought and paid for and is contributing nicely to profits,” said Prudential Bache’s Whitten.

Sony added a new piece of U.S. software, filmmaker Columbia Pictures Entertainment, early this month.

“I think there is going to be an impact, perhaps in the fourth quarter and first quarter next year,” Whitten said of the Columbia purchase. “There should not be much more than a six-month squeeze on earnings.”

Analysts said the company’s long-term outlook is good. “In the long term, it is still the most exciting company in the world in consumer electronics. There’s nothing like it,” said Baring’s Kouyoumdjian.