Sony might have posted a loss for the fiscal year ended in March, but the company says that the future looks much brighter.
Sony said (PDF) on Thursday that it expects to post a profit in the fiscal year ended March 2016 of 140 billion yen ($1.2 billion), more than making up for the loss of 126 billion yen the company suffered for the fiscal year ended in March. That profit would be the first the company would tally since the fiscal year ended in 2013 and its biggest profit in seven years. It would also mark an important turnaround for a company that has been facing its fair share of troubles over the last couple of years.
Looking even further ahead, the company is predicting a $4.2 billion profit by the end of its 2017 fiscal year, ending in March 2018.
So how do they aim to do that?
Although Sony has been able to turn its gaming division around and focus its efforts in other areas, mobile continues to be a source of trouble as consumers opt for devices from Samsung, Apple, and countless China-based handset makers, like Xiaomi and Huawei. In February, Sony acknowledged its woes in mobile, saying that the “challenging competitive landscapes” in that market has forced it to rethink its strategy. Over the next several years, Sony will focus on only a few territories to sell its products. The company also hasn’t ruled out selling its mobile division.
Meanwhile, Sony has experienced issues in other areas, forcing it to shed its television division and get out of the PC business. It plans to also offload its audio and video segments and says it will continue to get rid of more business segments that are proving to be a drag on its financials.
Those efforts are part of a broader strategy, announced in February, that will focus the conglomerate on four core businesses: the PlayStation gaming division, its film studio Sony Pictures, Sony Music, and the devices business that includes sensors and other components bundled into popular smartphones andtablets. Sony said at the time that it would invest heavily in those areas and reduce its spending on other, under-performing segments.
Meanwhile, Sony’s latest forecast seems to follow the company’s logic on growth. Sony’s Devices business will see its operating income jump by 32 billion yen year-over-year in the 2015 fiscal year ended March 2016. Sony Pictures and Sony Music will also generate a higher operating profit. Sony’s gaming business, however, is expected to be down.
Sony was once a dominant force in the tech space. Many of its products, including televisions, gaming products and devices like the Walkman music player, established the company as a leader and helped it achieve billions of dollars in profits in the 1990s and early 2000s. By the start of this decade, however, the company’s business started on a steep decline as the PlayStation 3 initially failed to gain traction, the Walkman was a distant memory, and everything from digital cameras to mobile devices were getting hit hard by competitors.
Sony’s troubles in mobile have been a thorn in CEO Kazuo Hirai’s side. In October, the company tried to shake up the division by appointing a new executive. The effort, which proved to be fruitless, came after Sony slashed its full-year smartphone sales forecast from 50 million units to 43 million. To put that into perspective, Apple sold over 61 million iPhones in its last-reported quarter, alone.
Interestingly, Sony’s mobile business, which has been a source of trouble for company, will contribute heavily to the company’s success this fiscal year. The company expects its operating loss in that division to fall from 217.6 billion yen to 39 billion yen. However, the reduction will be due to a decline in costs related to the restructuring of Sony’s business and not necessarily greater demand for its products. Indeed, the company says it expects fewer sales this fiscal year.
Although all eyes are on Sony’s future, its past year wasn’t nearly as troubling as some of its recent years. The company reported on Thursday that revenue was up 5.8 percent to 8.2 trillion yen. Sony was also able to reduce its losses a bit from 128.4 billion yen in the prior year to 126 billion yen for the year ended March 31. According to Sony, its gains in the past year was built atop the “strong performance ofPlayStation 4” and the popularity of its image sensors in mobile products. Still, shareholders don’t seem all that pleased with Sony’s performance and forecast for next year. The company’s shares are down 68 cents, or about 2 percent, to $30.02 in early trading on Thursday.