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Japanese electronics and entertainment company Sony Corp. reports first-half earnings on Friday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Since taking over in 2005, Sony Chief Executive Howard Stringer has been trying to unite the company's sprawling businesses, improve efficiency and cut costs. Those efforts are paying off. Sony has been forging ahead with new initiatives and products to drive growth, and is focused on better integration of its strengths in hardware and content.
The company in September launched the highly anticipated PlayStation Move, a wireless motion-sensing game controller that is Sony's answer to Nintendo Co.'s popular Wii console. Sony said it shipped more than 1 million Move controllers in North America and Latin America in the first 30 days since they went on sale, a sign of strong demand that bodes well for the holiday season.
Momentum is encouraging at mobile phone maker Sony Ericcson as well. The joint venture between LM Ericsson and Sony reported a third consecutive net profit in the third quarter, mainly thanks to success with its smartphones as well as new product launches and cost cuts. During the quarter, the company launched its Android-based Xperia models in new markets, including China and the U.S.
As with other exporters, however, Sony has been battered by a strong yen, which a series of 15-year-highs versus the dollar and led Japan to intervene in currency markets for the first time in more than six years. Industry-wide price cuts may have also hurt its bottomline.
BY THE NUMBERS: Sony expects to climb back into the black in the year through March 2011. It projects a net profit of 60 billion yen and revenue of 7.6 trillion yen. Last year, it posted a loss of 26.3 billion yen ($292 million) in the first half.
ANALYST TAKE: Credit Suisse analyst Shunsuke Tsuchiya gives Sony's stock an "outperform" rating. "If Sony's end-September inventories are within the normal seasonal range, and the company remains in the black for July-September, investors are likely to take a fresh look at the stock," he said in a recent report.
WHAT'S AHEAD: Sony's strategy of connecting its hardware and content faces intensifying competition from rivals such as Apple Inc. Tsuchiya says Sony needs to improve its video services and that the new Apple TV, which streams content from the Internet, "constitutes a direct threat to Sony."
Sony is preparing a marketing blitz to promote its new Google TV sets during the critical holiday shopping season in the U.S. The televisions, which feature Google's Web-surfing system, are $200 to $400 higher than comparable TVs. The differential may dampen sales as families continue to pinch pennies amid ongoing jitters about the economy.
It's also unclear whether a recent price cut of its PlayStation Portable Go will be enough to bolster sales. The handheld device has suffered from disappointing sales since its launch last year.
STOCK PERFORMANCE: Sony shares fell 28 percent in the April-September period, compared with a 15.5 percent decline by the Nikkei 225 stock average. The issue was down 1 percent at 2,730 yen in Tokyo Stock Exchange trading Thursday.