One of the main news stories over the last few months has been the devaluation of the yen, which contributed greatly to the 40% surge in Japanese equities so far this year. This week, the dollar popped over 100 yen. A weak yen benefits Japanese exporters, as their products become cheaper abroad. Japanese electronics giant Sony Corporation (ADR) (NYSE:SNE) has been struggling over the last few years, posting losses since 2009. However, the company is now finally back in the black, helped by the weaker yen and cost cutting initiatives.
Return to Profitability
While the quarterly and full-year profit reported by Sony Corporation (ADR) (NYSE:SNE) was not particularly large, the fact that the company is turning a profit again is certainly encouraging. For the quarter, the company earned $948 million, and the full-year figure came in at $434 million. The annual profit was up from a monster loss of $5.7 billion in the previous year, and beat the company’s expectations as well as the analyst consensus.
Sales for the quarter rose some 8% to $17 billion, of which roughly $1.8 billion can be attributed to positive exchange rate effects. Cost-cutting measures, including the sale of some of the company’s real estate, boosted the company’s profitability, whereas revenue benefited from an especially strong performance in its financial services division and its film business.
The biggest problem for Sony Corporation (ADR) (NYSE:SNE) at the moment is the revitalization of its electronics business, which is still proving to be a challenge. The television segment saw a 30% decline in sales for the eighth consecutive year of losses, and camera sales also slowed. However, the company is committed to returning to profitability in electronics, with several executives forgoing bonuses in order to support the cause. For the current fiscal year, Sony Corporation (ADR) (NYSE:SNE) expects a profit of $505 million, with a 10% increase in sales.
Outpaced by Rivals
Sony used to be one of the world’s main electronics companies, if not the number one. However, in the last decades it has seen its market share trampled by competitors. Apple Inc. (NASDAQ:AAPL)‘s wildly popular iPod and iPhone have all but killed Sony’s portable device business. These products propelled Apple Inc. (NASDAQ:AAPL) to a household name and the world’s primary electronics company, but even this giant seems to be losing some of its shine lately, having been overtaken by Samsung (NASDAQOTH:SSNLF) in the smartphone market. In their latest report, the company delivered results that were ahead of the consensus, but still down substantially from the year before. The company now hopes to revive interest in its stock by increasing its dividend and expanding its share repurchase program.