Sony's Mobile Division Lost $480 Million In Q2 2018

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Sony’s latest earnings report for the second quarter highlight relatively good overall growth that’s offset by losses suffered in every category measured for its mobile division. In fact, in terms of sales and operating revenues for the three months ending September 30, the company’s mobile unit lost just over $480 million compared to the previous year. That deficit is in spite of the tech giant’s overall company growth of around $1.113 billion year-over-year for the first half of the fiscal year. By quarter, that equates to an approximate shift of around $8.857 toward the negative. Total sales and revenues were, by comparison, up by around 1-percent while operating income was bolstered by 30-percent. Gaming, on the other hand, continues to be Sony’s biggest generator of income, with a year-over-year increase just above $316.6 million for that period.

Background: The losses posted by Sony’s mobile division for the third calendar quarter aren’t surprising at all with consideration the results of the previous quarter. In the first fiscal quarter of the calendar year – the second calendar quarter – Sony posted the equivalent of $97 million in the negative over the three-month period ending June 30. It’s total handset sales, meanwhile, dropped by $435 million. That represents just over a 10-percent increase to the overall losses for Sony Mobile. Despite optimism for the unit’s future performance and the company’s expected benefits from foreign exchange rate changes, the unit appears to be well on track to posting losses for the full fiscal year 2018. Total revenues for the company’s mobile operations this year have dropped again to land at approximately $1.04 billion from last quarter’s $1.18 billion. Setting that aside, the company’s total consolidated gains are listed at just over $1.06 billion year-over-year.

All of those losses, however, are in spite of the fact that the company has put out at least two praise-worthy handsets this year with the Xperia XZ2 Premium and the newer Sony Xperia XZ3. The latter of those devices had even been rated by a Strategy Analytics survey as having one of the best OLED displays on the market as of late August. The handset features an HDR-rated QHD+ panel that gives users ready access to a smooth Android 9 Pie experience out of the box, backed by an octa-core Snapdragon 845 SoC. Memory is set at 4GB while storage is a respectable 64GB and front-firing stereo speakers were part of that build as well as a haptic feedback-based ‘Dynamic Vibration System’. While there have been subsequent devices that are almost certainly better on the display front, not least of all the new Razer Phone 2, all of that adds up to a flagship that seems to be at least on par with its rivals. At the same time, its entry price point of $899 is considerably less expensive than at least some competing handsets.


Impact: It isn’t immediately clear exactly where Sony is going wrong on the mobile front but the outlook is not a good one for the Android smartphone portion of its business. Factoring in the aforementioned $1.04 billion in total mobile revenues, the company can’t really withstand these types of sustained losses for many more quarters. That doesn’t mean the unit will necessarily fail, as other companies such as HTC have been in similarly dire straights on the mobile front and are still producing great handsets. But it does mean that, for now, Sony’s mobile unit is not doing as well as the company has hoped it would be.