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Back in black: Sony expects to make a little money from its smartphones this year

It looks like the worst is over for Sony’s mobile business, at least for now. Sony published its forecast for the fiscal year ending March 2017, and the section that we’re interested in the most holds some good news
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May 24, 2016
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It looks like the worst is over for Sony’s mobile business, at least for now.

Sony published its forecast for the fiscal year ending March 2017, and the section that we’re interested in the most holds some good news. After several years of losses, Sony now expects to make a profit in its mobile communication unit. A relatively small profit, of 5 billion yen (around $45 million), but a breath of fresh air nevertheless.

For reference, last year Sony Mobile Communication booked a loss of 61.4 billion yen (around $560 million at today’s exchange rate). The year before the situation was even grimmer, with a whopping loss of 217.6 billion yen.

By comparison, $45 million in profits looks positively rosy.

Smartphone sales are actually expected to decrease this year, due to Sony’s culling of its mid-range line and “downsizing” in unprofitable markets. But the cost-saving measures that Sony painfully implemented over the last year are having the desired effect on the unit’s overall health.

Across all its divisions, Sony expects to record an operating profit of 300 billion yen this fiscal year, almost flat compared to last year (294.2 billion yen). The forecast is 25% below analyst estimates.

The unfavorable dollar-yen exchange rate, the slowing smartphone market, and the devastating earthquake that hit its sensor factory in Kumamoto in April took their toll on Sony’s forecast. If not for the earthquake, operating profit would’ve been closer to 400 billion yen, the company said.

Getting back to smartphones, what does this forecast mean for consumers? Hopefully, it means that the future of Sony Mobile Communication is now a little safer. Throughout 2015, Sony hinted that it would consider spinning off or selling its troubled mobile unit if it couldn’t return it to profitability. Now that the unit is back in black, it’s a little easier to be confident in the future of Xperia phones.