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Pre-ordered a PlayStation 4, perhaps from your Sony Xperia Z smartphone while downloading Skyfall ? Product buzz matters in consumer electronics and Sony's return to profitability will not hurt the impression of a comeback. But if there is one, it is not really financial – yet.
Sure, 43-billion yen ($434.5-million) of net profit is a big step in the right direction after four years that lost a net 856-billion yen – half of that just last year. But the gain needs context given the cost of producing it: the profit, for example, is only a tenth of the 400-billion yen Sony has spent on restructuring in the past five years, and it does not even cover next year's planned 50-billion yen revamp bill.
Still, the need for restructuring is one thing shareholders and management do agree on, although the intangible cost to the company of what is now a decade of upheaval is another matter. But long-running issues aside, what drove the return to profit? Divestments were a help: strip out the 42-billion yen of asset sales and net income would have halved. At the operating level, it was in fact Sony's stalwart unit – not consumer electronics, nor even movies and music, but financial services, which contributed a third of operating income. In fact, over five years, its financial unit has produced operating income more than three times that of the group. Electronics were far less inspiring. Losses were only stemmed by cost-cutting and streamlining just outweighing the hit from falling prices and lower sales. It is progress at all that the cuts made such a difference, but losing less is not the dream on which investor fortunes are built.
Long-running Sony followers will recall the infamous "Sony shock" profits warning ten years ago this month that heralded a decade of woe. There is irony in the fact that this year's sales forecast is almost exactly the same turnover that upset investors a decade ago. Improvement, in other words, has some way to go.