Sony Trims Loss Forecast After Strong Third Quarter

Sony said its net annual loss will likely be smaller than previously forecast after cost cuts and strong sales of its image sensors and PlayStation video game consoles helped its third-quarter profit beat estimates.

The Japanese consumer electronics and entertainment group, which has reported five net losses in the past six years, is in the midst of a restructuring that has so far seen it shrink its struggling smartphone and TV divisions and exit PCs.

Chief Financial Officer Kenichiro Yoshida, appointed in April 2014 to help turn the company around, said the latest earnings showed the restructuring efforts were bearing fruit.

“We said that we will carry through structural reforms, that there would be no sacred cows. It is taking time, but I think we may be starting to see results,” he told an earnings briefing.

Sony said Wednesday that preliminary results showed its operating profit doubled to 178.3 billion yen ($1.52 billion) in the October-December quarter, while sales rose 6 percent to 2.56 trillion yen. That was well ahead of the operating profit of 96.6 billion yen, on sales of 2.38 trillion yen, expected by analysts, according to Thomson Reuters data.

It also forecast a preliminary full-year net loss of 170 billion yen, narrower than a previous forecast for a loss of 230 billion yen. The current financial year ends on March 31.

The third-quarter numbers were not official as Sony could not yet compile accurate figures for its Hollywood studio following a massive hacking of its computer systems. Sony said the incident did not have a material impact on its finances.

Sony has struggled to gain market share in high-end smartphones, lagging far behind Apple and Samsung.

Some investors have urged Chief Executive Kazuo Hirai to eventually exit such unprofitable units and intensify Sony’s focus on its successful gaming and sensor businesses. Hirai is due to announce a new strategy on Feb. 18, the company said.

Sony forecast its mobile division to post a full-year operating loss of 215 billion yen, steeper than the 204 billion yen loss it had expected in October.

Aiming to speed up a turnaround, it said it would cut 2,100 jobs in the unit by the end of the fiscal year through March 2016, including 1,000 cuts already announced.

In contrast to the weak performance in smartphones, Sony lifted its annual operating profit forecast for its devices operations to 100 billion yen from a previous forecast of 67 billion, largely due to stronger demand for image sensors.

It also raised its annual outlook for the game and network division, forecasting an operating income of 40 billion yen from the 35 billion it expected in October.

(Reporting by Ritsuko Ando; Editing by Miral Fahmy)

This article originally appeared on Recode.net.