NEW YORK (TheStreet) -- Sony (SNE - Get Report) consists of some divisions that are spectacularly successful and others that are spectacular failures. The result is usually "meh." But a big shakeup is in the works.
The company reported what seemed like a great December quarter from Japan early today. Sales were reported at $22.979 billion, up 24% from a year before, and operating income was reported at $860 million, up 94.6%.
But Sony admitted this was due entirely to the yen, which fell from an average value of ¥81.2 to the dollar a year ago to ¥100.5 to the dollar this year. On a constant currency basis, sales were up only 5%. And the great December quarter was due to a single, hot product, the PlayStation 4 video game machine. Game sales were up 33% on a constant currency basis, with profits of $172 million, even after a $59 million write-off of some old PC game titles.
So, on balance, "meh" again. Or maybe "yech."That's because the full year ending in March should see a nearly $300 million shortfall, rather than the roughly $300 million profit Sony had been anticipating before its latest earnings release. The company could lose $1.1 billion in all. Shares actually fell on the release, with the ADRs trading in the aftermarket at around $15, down nearly $1 per share from their closing price the day before. Asked about Sony in October with the shares trading near $20, our own Jim Cramer said "I'd take a pass on that one." He seems to have been right. The big news came in a separate release, where CEO Kazuo Hirai, who previously headed the gaming unit, said Sony will sell its money-losing PC business and carve out the TV business into a wholly owned subsidiary, cutting 5,000 jobs by the end of March. The Vaio PC unit will be restructured through an investment company called Japan Industrial Partners, with the hope that a sale will be complete by the end of June. Sony will contribute 5% of the new company's operating capital, and it will hire just 250 to 300 of Sony's current employees in areas like planning and design.
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