Sony, Maker of PS4 and Breaking Bad, Earnings Fail Again

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No matter how great its franchises or brands are, no matter who the company employees as CEO, Sony Corp. (NYSE: SNE) continues to fail again and again at the bottom line. Perhaps suggestions that it needs to be broken apart to be more manageable and nimble are correct.

Revenue rose 10.6% in the most recent quarter to $18.1 billion, but that improvement was largely due to foreign exchange rates — a gift from the Japanese government. Sony lost $197 million. Sales of video cameras fell, which is nearly unavoidable given the rise of the smartphone camera. Sales in the game division, which includes the PlayStation franchise, rose only 5%. That has to be a disappointment for an operation that used to be Sony’s flagship.

The only bright spot in Sony’s earnings was a 39.3% increase in its cellphone division to $4.3 billion, a number that is dwarfed by those of competitors Samsung and Apple Inc. (NASDAQ: AAPL). In the world’s most competitive consumer electronics sector, Sony cannot continue to grow at the pace it did last quarter.

Sony’s movie and TV division is the part of the company that has been most widely attacked by outsiders. Its revenue fell 13% on a constant currency basis and it lost $181 million.

Sony also cut its forecasts for its fiscal year, which ends next March, for revenue, operating income and net income.

The first reaction of Sony’s critics will be to agree with Daniel Loeb, who runs the Third Point hedge fund. Sony needs to spin out its movie business or sell some of its shares to the public. Movies and TV have nothing to do with the consumer electronics base of the parent company. But the reaction is too simplistic. All of Sony is broken, not just the movie division.

Sony’s relatively new chief executive, Kazuo Hirai, who replaced the Sir Howard Stringer, the worst CEO in the company’s history, began his tenure with promises that results would improve. He was the better man, his arguments implied. Now, he has shown that he is not any better at all.

The numbers leave investors and interested outsiders to puzzle over whether Sony can ever be repaired. Probably not, because it continues to fall so far and so fast. It can be thrown on the corporate junk pile, its best years well behind it.