Continuing its string of quarterly losses, Sony suffered a net loss of 26.3 billion yen ($292 million) for its second quarter, reported the company on Friday.
Compared with a profit of 20.8 billion yen a year ago, this marked Sony's fourth straight quarterly downturn.
Sales for the quarter that ended September 30 also took a spill, dropping 19.8 percent to 1.66 trillion yen ($18.26 billion) from 2.07 trillion yen in the year-ago quarter.
Recent cost cuts and hot sales of the PlayStation 3 game console both provided a shot in the arm.
But Sony was hurt by a downturn in sales for the venerable PlayStation 2 despite its recent claim that the PS2 was "showing no signs of slowing down." Weak demand for the Vaio line of PCs also dragged down the quarter.
As a result, revenue in the Networked Product and Services division, which includes Sony Computer Entertainment, fell 24.2 percent to 352.6 billion yen from 465.2 billion yen in the year-ago quarter.
Other segments also upset the bottom line.
The Consumer Products and Devices business, which includes TVs and cameras, watched its sales plummet 36.5 percent to 799.9 billion yen from 1.25 trillion yen a year ago. Sales were down for Sony's Bravia HDTVs due to intense price competition and the higher value of the yen. The company's Cybershot digital cameras also were impacted by a decline in unit sales and the appreciation of the yen.
Lower sales both in the theater and at home hurt Sony's Entertainment division, with revenue down 30.4 percent to 136.4 billion yen from 196.1 billion yen in 2008's second quarter.
Sony Ericsson also affected the quarter with sales of 1.6 million euros ($2.36 million), a 42 percent decline from 2.8 million euros in the year-ago quarter. An ongoing drag on Sony's earnings, the cell phone maker has struggled to turn a profit in recent years.
One bright spot was Sony's music business, which enjoyed a 147 percent boost in revenue to 124.5 billion yen, stemming in part from sales of Michael Jackson's product catalog, following the entertainer's death in June.
Despite the quarterly loss, results narrowly surpassed expectations, prompting Sony to boost its forecast for the full fiscal year. The company now is eyeing a loss of 95 billion yen for fiscal 2009 versus its prior forecast of a 120 billion yen deficit. Sony lost 98.9 billion yen in fiscal 2008.
Sony recently announced that the PlayStation 3 will offer Netflix streaming, a move it hopes will bump sales of the game console even higher.
Though stung by a higher net loss and lower sales for the third quarter, Sony Ericsson managed to beat expectations.
The mobile phone maker said Friday it lost 164 million euros ($243.7 million) in the quarter, compared with a loss of 25 million euros ($37.1 million) in the third quarter of 2008.
But analysts polled had been eyeing a net loss of 227 million euros. The company's results also showed an improvement over the second quarter when the company had a net loss of 213 million euros.
Sales for the third quarter fell to 1.62 billion euros versus 2.8 billion euros for the prior year's quarter.
Third-quarter results for Sony Ericsson
(Credit: Sony Ericsson)The latest results were aided by aggressive cuts. Since mid-2008, Sony Ericsson has been on a mission to reduce operating expenses.
Earlier this year, the company announced a series of layoffs to reduce its global workforce by 5,000.
A joint venture between Sony and Ericsson, the company has also received a lifeline in the form of external financing. A total of 455 million euros was made available this year, with 350 million euros guaranteed by its parents.
"Our business in the third quarter started to show the effects of our ongoing transformation program," Dick Komiyama, Sony Ericsson's outgoing president, said Friday in a statement. "We have cleared channel inventories and have continued to realign internal resources and improve efficiency. We have also arranged external financing to strengthen the company's financial position."
The struggling company has been grazed by sluggish consumer demand for mobile phones and intense competition. The company said it expects the global handset market to decline by about 10 percent for the year. And its share of that market has remained small, resting at around 5 percent for the third quarter.
Management at London-based Sony Ericsson is in transition, with Komiyama retiring as president at year's end and handing the reins to Bert Nordberg. The two have already started running the company together as co-presidents.
Sony Chief Executive Officer Howard Stringer has also taken a more active role, replacing Sony Ericsson CEO Carl-Henric Svanberg this week as chairman of the board.
Sony Ericsson leaders say they are optimistic.
"Transforming the business for future growth and returning Sony Ericsson to profitability is the focus of the senior management team and will continue under the new leadership," Komiyama said. "Having refreshed our brand, we are now better positioned to support the launch of new products such as Aino and Satio (phones) in Q4 2009."
In January, the Gartner analyst group said that 2009 would be a deciding year for Sony Ericsson between profitability and growth in market share.
In September, Intel showed off Light Peak as if it were the latest hot idea out of the labs. But the fiber-optic communication technology could well be coming to a computer near you next year, rather than in some distant sci-fi future.
A Taiwanese optical networking company, Foci Fiber Optic Communication, is well along the path of selling Light Peak cables and other fiber-optic components.
"We plan to have our pilot run ready by the end of November 2009, and ready to be in mass production in the beginning of year 2010," said Janpu Hou, the company's vice president of business development.
Foci is not some no-name manufacturer of commodity gear, either. The company supplied the optical networking components used in the Light Peak demonstrations at the Intel Developer Forum in September.
... Read moreGoogle promised earlier this year that a major computer maker would start to ship its Chrome browser.
Sony's the one.
Sony's Vaio line has begun carrying the browser in the U.S., the Financial Times reported late Monday.
According to a Dow Jones report, all Vaio-branded PCs are now using Chrome as their default browser. A Sony representative told Dow Jones that there are no plans to add Chrome to Vaios outside the U.S.
Vaios will continue to come with Microsoft's Internet Explorer in tandem.
The Financial Times also reported that other companies are in talks with Google about Chrome and that the browser will also be promoted to Internet users who download RealNetworks' RealPlayer media-streaming software. Google has previously said it's in discussions with Dell about bundling the software.
To date--a day before the first anniversary of its launch on September 2, 2008--Chrome has around 30 million active users or around 3 percent of the global market. This makes it the fourth most-popular browser after Internet Explorer, Mozilla's FireFox, and Apple's Safari.
Rupert Goodwins of ZDNet UK reported from London.
Updated at 6:55 a.m. PDT: Details from Dow Jones report added.
It's not really a secret that Sony is in trouble. But the consumer electronics company is taking some calculated steps to change its fortunes.
On Friday, Sony announced it has hired longtime IBM executive George Bailey as chief transformation officer. He will report to Sony CEO Howard Stringer beginning June 1 as head of the Transformation Management Office and consult with two main company divisions: Consumer Products and Devices and Networked Products and Services.
George Bailey
(Credit: IBM)Bailey served for five years as the global managing partner of IBM's electronics industry consulting practice. His new title at Sony--though grand--describes exactly what Bailey has been known for in his career: fixing the way consumer electronics makers approach the business and help them make money--he even wrote a book about it.
Someone who can transform or kick-start Sony's global business is something the company desperately needs. Stringer has been saying for years he will reinvigorate Sony and figure out a way to get the many different parts scattered around the world to be more tightly integrated. But the results have been dismal: On Thursday, Sony reported its first annual loss in 14 years, to the tune of $1 billion.
Stringer has reshuffled some executives between its Japanese headquarters and its U.S. electronics division and most recently set out a manifesto of sorts for his company during his keynote speech at the Consumer Electronics Show. In it he said they needed to be focusing on the creation of better networked devices with long-term value and that embrace open standards and green materials.
Bailey has a simpler approach. In his book, "Irresistible! Markets, Models and Meta-Value in Consumer Electronics," he says the key to successful electronics companies involves shepherding innovation and giving customers what they want, from the packaging to advertising.
He has in the past praised Apple's approach to both the computer and consumer electronics markets, and specifically compared it to Sony's. It's a pretty easy bet that Bailey will be pointing out these differences to Sony and trying to steer the Japanese giant toward mimicking some of Cupertino's best practices.
The weak economy hasn't stalled the American consumer's flat-panel fix.
Following a decline last year, North American sales of flat-panel TVs surged during the first quarter of 2009, according to a report released Monday from market research company DisplaySearch. With demand often outpacing supply on some models, 7.2 million flat-panel TVs flew off the shelves, an increase of 23 percent from the first quarter of 2008.
Aggressive pricing followed by Circuit City's liquidation tempted consumers in search of bargains, according to the DisplaySearch report titled "Quarterly Global TV Shipment and Forecast Report."
Former small fry Vizio earned the No. 1 spot as the best-selling LCD vendor for the first quarter, a status it hasn't held since the second quarter of 2007. Vizio's share of the market jumped to 18.9 percent and was the only company to show a sales gain from the fourth quarter of 2008. "Vizio is a relatively young TV brand in the U.S. marketplace, but their strong alignment with mass merchant and warehouse club retailers seemed to put them in the right place at the right time with growing channels," said Paul Gagnon, DisplaySearch director of North America TV Research.
Funai, another company with low-cost offerings, also showed growth in market share--from 7 percent to 8.5 percent. Funai sells the Sylvania and Emerson brands in North America, and added the Philips and Magnavox brands last quarter. Companies with premium flat-panel models, such as Sony and Samsung, saw their market shares decline as consumers flocked to better deals and lower prices.
Last year gloomy sales were predicted for the industry as flat-planel TV shipments dropped during the second half of 2008. Sales continued their downward dip over the fourth quarter, showing a 2 percent decline over the previous year.
Select processors from Advanced Micro Devices do not support Windows 7 "XP mode" though, like Intel, the vast majority of shipping processors do support XP mode.
Microsoft describes XP mode on its Web site as follows: "As part of the upcoming Windows 7 Release Candidate milestone, Microsoft will release a beta version of Windows XP Mode, which allows users of Windows 7 Professional and above to launch many older Windows XP productivity applications directly from their Windows 7 desktop. The Windows XP Mode stand-alone feature is specifically designed to help small businesses that are using Windows XP applications move to Windows 7. For larger businesses, Microsoft Enterprise Desktop Virtualization (MED-V) MED-V 2.0 builds on top of Windows Virtual PC and provides centralized management of Windows XP Mode. MED-V 2.0 will be available in beta within 90 days of general availability of Windows 7."
"All CPUs AMD is currently shipping, except Sempron, include AMD-V and therefore support XP mode," an AMD spokeswoman said Wednesday.
AMD also cited processors that are not necessarily shipping currently. "With the exceptions of Sempron-branded processors and Turion K8 Rev E processors, all notebook processors shipped by AMD include AMD-V and therefore support Windows 7 XP mode," AMD said. "With the exceptions of Sempron-branded processors and pre-Rev F Athlon branded processors, all of the desktop processors shipped by AMD include AMD-V and therefore support Windows 7 in XP mode."
And Opteron processors: "Also, all AMD Opteron processors shipped by AMD from Rev F forward include AMD-V," according to AMD.
A quick search on Best Buy's Web site turned up very-low-end systems that use the Sempron processor. For example, a $329.99 Acer desktop is currently being sold with a Sempron processor. And on Hewlett-Packard's Web site, an HP Compaq dx2450 Microtower (starting at $329), for example, can be configured with a number of different Sempron processors.
Dell has sold laptops, such as the Latitude D531, with AMD Mobile Sempron processors.
An earlier Nanotech: The Circuits Blog post cited Intel processors that do not support XP mode. Intel spokesman Nick Knupffer asserts this won't be a big issue. "Having VT (Virtualization Technology) on these consumer laptops is not going to be an issue--because the consumer versions of Windows 7 (Starter, Home Basic, and Home Premium) do not include Windows XP Mode," he writes.
Updated on May 6 at 6:35 p.m. PDT with additional comments from Intel.
A small brouhaha is erupting over Windows 7 and Intel processors. The hubbub is centered on which Intel processors will not support "XP mode" in Windows 7 and, by extension, which PCs will not support XP mode. Retail laptops may be one of the most prominent segments affected.
Sony Vaio laptops sold at retail stores are among a number of models from a variety of PC makers that have processors that don't support Windows 7 XP mode
(Credit: Best Buy)What is XP Mode? Here's how Ina Fried of CNET News describes it: "XP mode consists of two things, the Windows Virtual PC engine and a licensed copy of Windows XP Service Pack 3 as a packaged virtual machine. Although neither piece will be included in the Windows 7 box, XP Mode will be a free download for those who have a license to Windows 7 Professional, Windows 7 Enterprise, or Windows 7 Ultimate."
XP Mode (XPM) is aimed at businesses that have Windows XP-specific applications that they need to run on Windows 7. XPM allows XP applications to run seamlessly on Windows 7, according to Microsoft. The catch: Intel processors must have Virtualization Technology, or "Intel VT," in order to run XPM. (I won't cover Advanced Micro Devices processors here but will address AMD in a later post.)
Ed Bott's Microsoft Report says that "some of the most popular PCs on the market today...won't be able to use the vaunted Windows XP mode in Windows 7."
Bott lists Intel desktop and mobile processors that will and will not support XP Mode here and here, respectively.
Intel mobile processors may be the most problematic in supporting XP mode; not because of the raw numbers--most newer Intel mobile processors do, in fact, support Intel Virtualization Technology--but because a disproportionate number of those that do not have VT (and therefore don't support XP mode) are laptops sold at retail. (And, undoubtedly, some small businesses purchase laptops at retail.)
In the Core 2 mobile camp, the P7350/7450, the T5200/5250/5270/5300/5450/5470 series, and the T6400/6570 do not support VT, according to Bott's blog. And this can be confirmed on Intel's Web site.
A quick glance at Best Buy shows a somewhat lengthy list of laptop SKUs (models) with, for instance, the T6400 (non-VT) processor. The list includes Dell Studio, Toshiba Satellite, HP Pavilion, Sony Vaio, Asus, and Gateway laptops.
In the $600 to $899 laptop range, I found about 30 different SKUs with T6400 processors, though it should be noted that some of these SKUs are simply models with slightly different configurations.
And a quick search on CNET Shopper turns up a number of consumer models with the T5270. The point? To state the obvious, consumers will have to verify which processor their laptop has.
In an Intel blog, Nick Knupffer asserts this won't be a big issue. "Having VT on these consumer laptops is not going to be an issue--because the consumer versions of Windows 7 (Starter, Home Basic, and Home Premium) do not include Windows XP Mode," he writes.
And Intel, in a statement, had this to say. "Intel introduced its Virtualization Technology in 2005 and has shipped over 100 Million chips with the feature. Windows XP Mode is targeted for business customers. It is available on the mid to higher end versions of Windows 7 and is supported in hardware by many Intel processors."
Intel continued: "Intel vPro technology PCs are required to have an Intel VT capable CPU and Intel VT capable BIOS. They are the best platforms for testing and deploying Microsoft Windows Virtual PC and Windows XP Mode."
To stem continued losses, Sony said Thursday there will be no pay increases for non-managerial employees this year.
Sony doesn't give automatic raises every year based on seniority--unlike many other Japanese companies--but instead awards them based on responsibility and performance, according to Reuters.
It's the first time Sony has ever made such a move, but the company's financial circumstances give it few options. Sony is predicting an operating loss of $2.9 billion for the current financial year ending March 31, the electronics giant's first annual loss in 14 years.
It has already resorted to closing several factories, laying off 16,000 full-time and contract workers, cutting salaries for managers, and trimming bonuses.
Sony is just one of many Japanese electronics companies that have been hurt by the global economic downturn and a stronger-than-expected yen.
Updated on March 18 at 8:00 p.m. PST with additional information throughout.
Nvidia on Tuesday said it has signed a license agreement with Sony to provide PhysX technology for the PlayStation 3, whereby Nvidia becomes the official tools and middleware provider for Sony PS3.
Nvidia's PhysX technology--based on the laws of physics--enables game objects to respond in a realistic way to physical events. More conventional technology uses a canned response, in which the same response is repeated over and over.
For example, a window breaks, or a person falls the same way every time. In a PhysX-enabled football sports game, however, the angle and velocity of the impact is calculated by the graphics processor to generate a real-time response that is different practically every time.
The agreement with Sony Computer Entertainment covers tools and middleware for the PlayStation 3. Nvidia is now an official Tools and Middleware provider for Sony PS3, according to Bryan Del Rizzo, an Nvidia spokesman. "This new relationship means a couple of changes in how the PhysX SDK for PS3 is managed. As a Sony Computer Entertainment Tools and Middleware provider, Nvidia will now be exclusively responsible for maintaining and enhancing the PS3 PhysX SDK," he said.
Rizzo continued: "Additionally, while Sony has a license to distribute and support users of the binary version of the PhysX PS3 SDK, Nvidia will now be responsible for licensing the source code PhysX SDK for PS3 as well providing direct support to all source code-licensed PhysX PS3 developers," he said. "This newly announced tools and middleware relationship with Sony closely mirrors the licensing and support model that has existed for years with Microsoft and its Xbox 360 platform and complements our plans to support future console platforms."
Nvidia described the SDK as "a full-featured (application programming interface) and robust physics engine, designed to give developers, animators, level designers, and artists unprecedented creative control over character and object physical interactions by allowing them to author and preview physics effects in real time."
In December, Electronic Arts and Take-Two Interactive Software adopted Nvidia's PhysX technology.
