Sony cuts profit outlook by 40 percent despite strong smartphone sales

Sony made an operating profit of ¥14.8 billion ($151 million) in the second quarter of its fiscal year, as strong smartphone sales and a weak yen partially offset poor performance in the entertainment division. The company’s mobile division brought in ¥418.6 billion yen ($4.27 billion), a 39 percent year-on-year increase, but Sony’s net loss overall was 19.3 billion ($197 million).

The pictures division made an operating loss of ¥17.8 billion yen ($181 million) despite slightly increased revenues; Sony notes the poor performance of White House Down compared with The Amazing Spider-Man, its equivalent blockbuster from this time last year. Sony’s entertainment business is under increased scrutiny following CEO Kaz Hirai’s high-profile decision to reject a spinoff proposal by investor Daniel Loeb.

The company has cut its full-year net profit forecast to 30 billion yen (about $300 million) — a 40 percent decrease from its last projection of 50 billion yen. Sony expects lower sales of TVs, digital cameras, and PCs than it had previously predicted, and also warns of underperformance in the movies division.

Its outlook for the gaming division, however, is unchanged, meaning the company remains bullish about the upcoming launch of the PlayStation 4. The new console is expected to move 5 million units by the end of March and “contribute to profitability from an early stage;” its predecessor, the PlayStation 3, sold 3.5 million units in the same timeframe seven years ago and dragged down Sony’s bottom line for some time. Sony also expects strong sales to continue for its smartphones such as the Xperia Z, which the company says “ranked in the top 3 in approximately 20 countries by revenue.”