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SONY EARNINGS DIVE, TIME WARNER RETURNS TO PROFIT

Music Improves Sony Numbers, Disappears from Time Warner’s
Sony reported a 26% drop in earnings for its latest quarter ended December 31, thanks to restructuring costs and weaker profits from hardware, movies and games, all of which offset—get this—improvement in music.

Time Warner, meanwhile, said it returned to profit in Q4 2003 after having reported a near-$45 billion loss due to writeoffs related to America Online—and stopped reporting results for Warner Music Group, which within days will be owned by a private investor group led by Edgar Bronfman Jr. and Thomas H. Lee Partners.

Sony reported earnings of 92.6 billion yen ($875 million) for the quarter, down from 125 billion yen in 2002. Revenue, however, increased slightly (0.7%) to 2.3 trillion yen ($22 billion).

Sony has recently cut 12% of its work force (about 20,000 jobs) as it attempts to remain competitive and struggles to come up with the next Walkman.

But now for the good news: Sony Music Entertainment’s operating income for the quarter increased 50% to 30.3 billion yen ($286 million), compared to 20 billion yen a year earlier, even though sales decreased by 3 percent. The company attributed the increase in profitability to lower advertising, promotion and overhead expenses as the music division undergoes continued belt-tightening.

Time Warner, meanwhile, reported net Q4 earnings of $638 million, or 14 cents a share—a penny under the per-share figure analysts expected. Nevertheless, it compares favorably to last year’s $10.04 loss per share. Revenue rose 6% to $10.9 billion.

While TW did not report results for WMG, it did say that putting the $2.6 billion from Edgar Bronfman Jr. and partners is in the bank will enable it to trim the company’s overall debt to a target level of about $20 billion (down from $25.8 billion at the end of 2002) nearly a year early.
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