TOKYO (Reuters) – Sony Corp reported a higher than expected first-quarter operating profit on Thursday, boosted by strong sales of its flagship Xperia smartphones in Japan and rising shipments of image sensors to phone makers.
The bump in profitability may not be enough to please activist shareholder Daniel Loeb, whose New York-based Third Point hedge fund is proposing Sony spin off as much as one-fifth of the group’s money-making entertainment arm – movies, TV and music.
The maker of PlayStation game consoles and Bravia TVs logged an operating profit of 36.4 billion yen ($369.68 million) in the April-June quarter, topping the 25.3 billion yen April-June operating profit expected by four analysts surveyed by Thomson Reuters I/B/E/S. The company posted an operating profit of 6.3 billion yen in the same period last year.
“While movies, music and the financial business are providing stable profits, the biggest challenge that we face is the rebirth of electronics and returning that division to profitability … With that in mind, I believe this result is adequate,” Chief Financial Officer Masaru Kato told reporters.
Sony’s board is expected to reject Loeb’s proposals, the Nikkei newspaper said on Thursday, with directors arguing that the electronics company could compete better by maintaining ties with the entertainment arm of the business.