Sony Earnings Drop 26% on Restructuring Costs

Sony Corp.’s earnings dropped 26% in the latest quarter as expenses for job cuts and other restructuring costs and lower profit from its electronics, moviemaking and video game business offset profit improvement in its music business.

But the Japanese electronics and entertainment giant said Wednesday its sales rose for the fiscal third quarter ended Dec. 31, and it boosted its profit forecast for the year due to a gain on a currency investment.

The Tokyo-based company said earnings were $875 million in the October-December period as sales inched up 0.7% to $22 billion.

Sony is in the middle of a major reform effort, which includes slashing 20,000 jobs, or more than 12% of its global workforce. Like other Japanese electronics makers, Sony has faced tough competition from U.S., South Korean and other manufacturers that offer cheaper products by taking advantage of lower labor costs.

Restructuring charges in the quarter were $507 million, mostly in electronics.

Sony Chief Executive Nobuyuki Idei said his restructuring efforts were “progressing smoothly,” and the company introduced new models of flat-panel TVs, DVD recorders, digital cameras and other products.

Sales in Sony’s core electronics segment rose 0.4% to $14 billion on solid demand for camera-equipped cellphones, DVD recorders, and Vaio personal computers. But profit dropped nearly 40% to $468 million, mainly for job-cut expenses.

Profit in the game division sank 1.6% to $666 million on higher development costs for computer chips. Sales edged down because of price reductions in the U.S., Japan and Europe for the PlayStation 2 console. Game sales fell 4.5% to $3.5 billion from a year earlier. Worldwide, Sony shipped 6.83 million PS2 machines in the quarter, down 1.2 million from a year earlier.

Sony’s movie business suffered, unable to repeat the success of the previous year’s “Spider-Man.” Profit plunged 82% to $53 million. Sales at Sony Pictures Entertainment fell 29% to $1.7 billion.

Sony Music Entertainment posted a 50% jump in profit at $286 million, though sales fell 3% to $1.7 billion. Albums that did well included Michael Jackson’s “Number Ones” and Beyonce’s “Dangerously in Love.” Lower advertising, promotion and overhead expenses helped boost profitability, Sony said.

Sony raised its fiscal year profit forecast to $520 million from the earlier $473 million, crediting a foreign exchange boost in a hedge fund that got a lift from the dollar’s fall against the yen.

Sony shares traded on the New York Stock Exchange fell 35 cents to $39.95.