What appears to be an economic recovery in Japan - reflected in Sony's first annual net profit in five years announced Thursday - could be little more than a blip.
Sony is no longer an electronics company. It generates most of its profits from its financial services company (Sony-Finance), which sells life insurances and credit cards in Japan, and entertainment businesses (Sony Pictures, Sony Music). The company’s TV and mobile phone businesses are clearly dragging Sony’s bottom line.
More troubling is that no quick-fix solutions seem available to turn its electronics businesses profitable. Touching on that subject, Sony's chief financial officer, Masaru Kato, was quoted at a news conference, "The market environment and competitive landscape remains severe in the electronics business."
Despite the much-anticipated, new PlayStation 4 consoles’ scheduled launch later this year, Sony is expecting videogame profits to be flat in this fiscal year.
Mobile phones are another key area Sony’s chief Kazuo Hirai is counting on the company’s recovery. Again, beyond the additional restructuring measures in its business, Sony’s prospects for any meaningful gain in share in the U.S. and China markets remain murky.
Strategy Analytics noted that Sony captured less than 1 percent of the U.S. market in 2012.
IDC ranked Sony fourth globally on the smartphone market in the fourth quarter of last year with a 4.5 percent share. But in the first quarter this year, Sony fell off the top five entirely.