Sony’s Profit Swings Higher

Sony Corp. on Wednesday reported a more than twentyfold increase in profit for its fiscal first quarter, but nearly all of it came from joint ventures.

Net income for the period ended June 30 was $214 million, or 22 cents a share, up from $10.1 million, or 1 cent, last year. The quarter’s sales of $14.8 billion, however, were only slightly better than the $14.7-billion figure of a year earlier. The dollar figures are based on 108.8 yen to $1, which Sony said was the average exchange rate during the latest quarter.

Sony’s core electronics business, which accounts for nearly 70% of the company’s revenue, had a slight drop in sales and a 50% drop in operating profit. The company remains mired in delays and a lengthy restructuring.

InterTrust Technologies Corp., a digital patent holding firm that Sony owns with Royal Philips Electronics and other investors, brought Sony a one-time payment of $118 million as part of a settlement between InterTrust and Microsoft Corp.

The Tokyo-based company also received $53 million from Sony Ericsson Mobile Communications Ltd., a cellphone joint venture with Ericsson.

In other key business units, game sales fell 16% and revenue from music, TV and movies was basically flat before Sony Pictures Entertainment received help from a superhero in red tights.

The earnings results were released Wednesday before the opening bell on the New York Stock Exchange, where Sony’s U.S. shares rose 3 cents to $35.03.

Chairman Nobuyuki Idei tried putting the best face on the situation, characterizing fiscal 2005 as “an important year for strengthening the foundation necessary for achieving mid-to-long-term growth.”

The inertia was most apparent in the electronics division, which was hit with almost all the quarter’s restructuring charge of $110 million. The unit reported sales of $10 billion and operating income of $63 billion.

Analysts have criticized Sony for being slow to introduce hot products such as flat-screen televisions, digital music players and DVD recorders.

“Sony’s brand used to be the best in the world, but the company doesn’t have many good products” lately, said Shinichi Haneda, a portfolio manager at AIG Global Investment Corp. in Japan.

Sony Pictures, which oversees movies and TV production and distribution, had a 2% drop in sales to $1.4 billion, partly because of reduced syndication revenue for the sitcom “Seinfeld.” The division reported an operating profit of $37.7 million.

The success of “Spider-Man 2,” which opened on the last day of the quarter, should help turn things around for the rest of the year, said Hiroshi Takada, an analyst with J.P. Morgan Chase & Co.’s office in Tokyo.

The music division pared its operating loss to $10 million, down from $55 million last year. The unit has plans to merge with Bertelsmann’s BMG, and on Wednesday the Federal Trade Commission said it would not block the deal. The FTC’s decision came after last week’s endorsement of the deal by the European Union’s antitrust authorities.

Sony’s games unit posted an operating loss of $26.7 million.

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Reuters and Bloomberg News were used in compiling this report.