Earlier today Sony released its long awaited fiscal report for 2012 and as expected the company has finally broken its 5 year streak of bad luck. The company posted a net profit of 43bn yen or $458 million, a vast improvement over its $5.7 billion net loss in 2011.
On the game side of things, like across the industry Sony is seeing a 12 percent drop in profits but still posted a small operating gain in the PlayStation division. The company revealed that where its taking the most beating is in its handheld division with the PS Vita’s slow sales. Notably, Sony reports that PS3 and PS2 sales combined totaled 16.5 million units for 2012. PS3 rival, Xbox 360 sold 10 million units in 2012.
While Sony started lumping PS2 sales in with the PS3, its not difficult to extrapolate an approximation of the each of the sales. PS2 sales have been dropping steadily year after year from 7.9 million (2009) to 6.4 million (2010) to 4.1 million (2009), progressively decreasing. You can reasonably assume that PS2 sales attributed to around 2 to 3 million units out of the 16.5.
Sony noted that the company expects to sell 10 million PS3s in 2013, with the launch of the PS4 later in the year. The company also noted that significant capital has been spent in R&D for the next gen console impacting the game division’s operating income.
The company also posted a very impressive $2.4 billion operating income, which was boosted by several factors – weakening of the Yen against the dollar, sales of two buildings, sales of chemical segment and M3 shares.
This is definitely good news for Sony and really shows how serious Kaz Hirai is about turning the company around. While Sir Howard Stringer, former CEO of Sony was unable to make the tough decisions needed, it appears that Hirai is making decisive yet strategic decisions across the board.
Some analysts such as Gerhard Fasol of Eurotechnology Japan was quick to point out that these gains “really need to be subtracted from the results, to understand the regular operating results.” Fasol believes that these numbers do not reflect the company’s true success.
While Fasol does have a point, its not as simple as that when considering that the two building sales were strategic asset conversions. It makes sense to sell assets of non-core business units and lease office space. A better question is why didn’t Stringer look at offloading some of these bloated non-core assets and business units such as the chemical and battery divisions during his tenure?
Here is a quick inventory of the sales of assets for 2012 (net):
- New York Building: $691 million
- Osaki City Building: $450 million
- Chemical business: $97 million
- Total Asset sales: $1.2 billion
In addition to the sales of the assets mentioned above, Sony came into some M3 shares as a bonus from its So-net acquisition. Sony offloaded these shares and earned a cool $1.3 billion in 2012.
While its easy to argue that the only reason Sony made a gain was due to the sales of its asset, lets not forget that the company was also busy spending that money by making strategic acquisitions per Kaz Hirai’s mandate. On a number of occasions, Hirai stated that making these acquisitions would be critical to the success of Sony’s future business.
Here is a quick inventory of the acquisitions in 2012 (est.):
- Sony Ericsson: $1.5 billion
- Gaikai: $380 million
- EMI Music Publishing $2.2 billion (joint) – est. $450 million
- Left Bank Pictures: $60 million
- So-net: $764 million
- Total spent on Acquisitions: $3.15 billion
The last one on the list is actually quite impressive, with Sony acquiring ISP company So-net wholly near the end of 2012 for an estimated value of $764 million through shares. Just three weeks ago, Sony made headlines with the launch of Nuro, So-net’s 2GB/s Internet service. Nuro is said to be the fastest Internet tech in the world, currently beating out Google’s 1GB/s Fiber technology by a significant margin. According to Sony, So-net’s acquisition was made to bolster its already growing Cloud infrastructure.