Sony Sees Smartphones Slip, Semiconductors Surge

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Sony’s Mobile Communications business was the company’s only division to record declines in earnings in its fiscal Q2 (calendar Q3), primarily due to a drop in smartphone unit shipments.

The Japan-headquartered company shifted 3.4 million units in fiscal Q2 2017, down from 3.5 million in the comparable 2016 quarter. While the business unit recorded what Sony called a marginal increase in revenue, from JPY168.8 billion ($1.48 billion) in fiscal Q2 2016 to JPY172 billion in the recent quarter, the division slipped to an operating loss of JPY2.5 billion compared with a profit of JPY3.7 billion in the comparable 2016 period.

Sony cited a shift in the geographic mix of its smartphone sales as a factor in the decline in shipments but also said the Mobile Communications unit suffered due to an increase in the cost of key components during the recent period. Foreign exchange rates were also a factor: the company faces a “high ratio” of costs in US$, causing a problem as the Yen appreciated in value relative to the US currency.

The company’s Semiconductor division registered revenue of JPY228.4 billion, up 17.9 percent year-on-year, which Sony stated was primarily due to a “significant” increase in unit sales of image sensors for mobile products. However, it noted the comparable 2016 figure was impacted by write-downs to cover a drop in output following earthquakes.

An operating loss of JPY4.2 billion by the Semiconductor business in 2016 was overturned with a profit of JPY49.4 billion in the recent quarter.

Outlook
The company downgraded its forecasts for the full year performance of its Mobile Communications business. It now expects to ship a total of 15.5 million smartphones compared with a previous prediction of 16.5 million (albeit the revised figure is still up on shipments of 14.6 million units in fiscal 2016). Revenue is now tipped to hit JPY780 billion, down JPY40 billion, but the company is standing by its previous forecast of an operating profit of JPY5 billion as it targets a reduction in operating costs.

Sony hiked its Semiconductor revenue forecast by JPY20 billion to JPY880 billion amid confidence in continued strong sales of mobile imaging sensors. Operating income is expected to hit JPY150 billion from JPY130 billion previously.

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