Sony Financials

There wasn't a lot of detail released in Sony's latest financial statements, though they are now more clearly breaking out results from the Imaging Products and Solutions Group. Bottom line: compact camera sales down significantly, interchangeable lens mount cameras (Alpha DSLRs, NEX mirrorless) up an unspecified amount. Also: professional video equipment sales were up. Sales for the full group were up 7.6% year to year, but profit was basically flat (note however that last year's results that are being compared against were partially impacted by the Japan earthquake and tsunami). 

Notable quotes: 

  • "...the market for compact digital cameras is shrinking as the market for smartphones with camera functions grows." 
  • "The image sensor business not only contributed to differentiation of Sony’s products in the current quarter but it also contributed to profit through external sales."

One thing that might surprise some is that Imaging Products & Solutions—which includes both still cameras and video—is a larger business now than the Game (Playstation, et.al.) group. Indeed, in sales it's bigger than the Mobile Products and Communications Group, the Motion Pictures Group, The Music Group, and the Devices Group (which is where image sensors live). Only Home Entertainment (TV, audio, video) and Financial Services are bigger. The surprising thing to most people is that Sony's most lucrative business is Financial Services, not any of their device or content businesses. 

Something I always look at in the financial results is the forward prediction of the yen's value. For the dollar, Sony is predicting 80 yen to the dollar (today's rate is 78.36), and 100 yen to the Euro (today's rate is 97.09). When values drop significantly below predicted rates, we tend to see price increases; when they rise above predicted rates, we tend to see more instant rebates and sales. That's not a perfect predictor, but it's a good surrogate for general price trends. A 5% move in yen/dollar or yen/Euro values puts substantive pricing pressure on Japanese companies. Given that most of the camera companies are Japanese, this pricing pressure tends to be industry wide, much like oil prices affect the airline industry. 


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