Sony reported operating income down 5.9 percent in the quarter ending December 31 on a slight drop in sales, as the strong yen and a poor quarter for Sony Pictures and LCD TVs hit earnings.
Sales and revenue were down on the same quarter in 2009 to 2.2 trillion yen ($27.2 billion), although in local currency terms they grew 6 percent. The yen had appreciated 8.7 percent against the dollar and 18.5 percent against the euro over the year.
"If the effect of exchange rates is removed, operating profit would have risen more than 20 percent," CFO Masaru Kato told a Tokyo press conference.
The Social Network was Sony Pictures' biggest earner of the quarter, while theatrical revenues were hit by the poor performance of How Do You Know. The same quarter in 2009 had seen strong sales from the releases of 2012 and Michael Jackson's This Is It.
Sales at the division dropped 26.7% to 149 billion yen ($1.8 billion), the drop also exacerbated by the weak dollar and poor home entertainment earnings. A continuing recovery in advertising revenues at Sony's international television channels made them a rare bright spot for the division.
The Networked Products and Services division, consisting of gaming and laptops, saw a big jump in profits thanks to reduced costs in the game sector, despite a small drop in sales.
The game business has now been profitable for five consecutive quarters, although laptop sales were down.
"The reduction in manufacturing costs for PlayStation 3 hardware, as well as hit games such as Gran Turismo contributed, to the division's income," said Shiro Kambe, svp corporate communications, announcing that Sony was upping its full year (to March 31) forecast for the division.
Sony's core Consumer, Professional & Devices division, which accounts for nearly half of overall sales, saw a 47.2 percent drop in operating income due to falling prices for LCD TV sales.
Sales were down 14.5 percent to $1.72 billion in the music division due tothe continuing decline of the physical market, only partially offset by increased digital downloads. Big-selling albums of the quarter included those from Michael Jackson, Susan Boyle, Bruce Springsteen, Kings of Leon and two from the cast of Glee.
Despite the quarterly results being better than expected, Kato said Sony was taking a "conservative" view and not raising its overall full-year forecast.