Sony electronics rebound unlikely to ease pressure for change
By Mari Saito
TOKYO (Reuters) - Sony Corp said its electronics division faces hard times ahead even after a weak yen helped pull it into profit for the first time in two years, ratcheting up pressure on the board to respond to activist shareholder Daniel Loeb's proposal to split the company in two.
Thursday's better-than-expected earnings are unlikely to placate billionaire investor Loeb, whose New York-based Third Point hedge fund wants Sony to spin off as much as a fifth of its money-making entertainment arm - movies, TV and music - in order to make it more transparent and accountable.
"The results are largely in line with the market consensus but it's not enough of a recovery to fend off Third Point's arguments," said Tomoichiro Kubota, senior market analyst for Matsui Securities. "Excluding the impact of the weak yen, it still looks tough for the electronics division."
Sony logged an operating profit of 36.4 billion yen ($369.68 million) in the April-June quarter, topping the 25.3 billion yen profit expected by four analysts surveyed by Thomson Reuters I/B/E/S.
Its Xperia smartphones have sold well and the company lowered its yen exchange rate assumptions - which will boost its earnings from sales overseas - while cutting costs.
But it acknowledged harsh market conditions for consumer electronics, cutting full-year sales targets for products from PCs to TVs to video cameras, and left its full-year profit forecasts unchanged even as it lifted its revenue forecast more than 5 percent.
"We were able to achieve adequate (first-quarter) results but I'm not necessarily optimistic about the future," Chief Financial Officer Masaru Kato told reporters.
LOEB'S LETTER Continued...