Electronics giant Sony Corporation yesterday said its quarterly operating profit rose 52 per cent as a big pension gain outweighed losses in its movie and TV operations, but it said it still expected a fullyear loss.
Sony said it was enjoying strong sales of new LCD TVs and camcorders and that the one-off pension gain, amounting to a hefty 73.5 billion yen (£357.4 million) in the quarter, was about 20 per cent larger than anticipated due to stronger Japanese share prices.
But the company stuck by its forecast of an operating loss of 20 billion yen (£97.2 million) for the year to March, underscoring a lack of confidence in its core electronics division, which would have lost 47 billion yen (£228.5 million) in the quarter without the pension gain.
"We still don't know what kind of products and at what prices our competitors are going to bring to market in the year-end shopping season.
"So we are taking a cautious stance," said chief financial officer Nobuyuki Oneda.
Sony, the world's secondlargest consumer electronics maker after Japan's Matsushita Electric Industrial, said group operating profit came to 65 . 92 billion yen (£320.6 million) in the second quarter ended September, against a 43.4 billion yen (£211 million) profit a year earlier.
Sales were virtually flat at 1 . 703 trillion yen (£8.28 billion).
Sony's movie business swung into a loss due to the absence of a hit film like Spider-Man 2, but the game division returned to profit thanks to strong sales of the new PlayStation Portable (PSP) handheld game device and the PlayStation 2 console.
But Sony's core earnings are remaining weak amid the deteriorating demand for traditional cathode-ray tube TVs - and now fierce price competition in markets for liquid crystal display - LCD - TVs and image sensor chips used in digital cameras and mobile phones.
Under new chief executive Howard Stringer, Sony embarked on a restructuring plan last month designed to help it catch up with rivals such as Matsushita and Sharp in flat TVs and Apple Computer in portable music.
The company increased its shipments target for the PSP in the current business year to next March to 14 million units from 13 million.
It also raised its PlayStation 2 game console shipment forecast by 1 million units to 14 million.
TV operations posted an operating loss of 38 billion yen (£184.8 million) in the quarter and Sony acknowledged that it has not yet established a production structure that would make it competitive with stronger rivals like LCD TV giant Sharp.
Sharp and Matsushita are more efficient in making flat televisions and other key digital products because, unlike Sony, they make most of their own core parts.
This allows them to add value to their products and better control costs.
"We still can't keep up in terms of costs," said Sony Corporate executive and senior vice-president Takao Yuhara.
Semiconductors is another problem area.
The chip division lost 20 billion yen (£97.2 million) in the quarter due to sliding prices of charge coupled devices (CCD) and development costs for its "Cell" microprocessor developed jointly with Toshiba and IBM.