Sony expects smartphone sales to jump to 42M units this fiscal year

Sony swung to an annual profit for the first time in five years and said it expects smartphone sales to jump by more than a quarter to 42 million units this fiscal year, as the once-venerable electronics maker leans more on its mobile business to help revive its fortunes.

Sony reported that it booked a net profit of $435 million in the financial year that ended in March, its first profit since 2008. The Japanese company, which took control of its mobile operations last year after ending a joint venture with Ericsson (NASDAQ:ERIC), said its electronics operation will turn an operating profit of about $1.07 billion this fiscal year, compared with a loss of $1.3 billion a year earlier, Sony CFO Masaru Kato said, according to Bloomberg.

Importantly, the company forecast growing smartphone sales--Sony Mobile Communications is expected to ship 42 million units in the fiscal year to April 1, 2014, up from 33 million units in the last fiscal year. "Smartphones are going to start making contributions to profit this year," Kato said. "Xperia Z has been getting great response from customers."

Indeed, the Xperia Z, which went on sale in February to strong reviews, has been a bright spot for Sony's Xperia brand of Android smartphones, which has struggled to gain traction in certain markets, especially the United States. Still, the forecasted sales increase was welcomed as a positive sign by analysts.

"It (42 million) does not seem a lot," Mtsushige Akino, chief fund manager at Ichiyoshi Asset Management, told Reuters. "Its smartphones are high-spec and production costs should be hefty, so the company has to sell a lot to be profitable in the business."

The high-end Xperia Z is Sony's flagship model for 2013 and features 
a 5-inch HD 1080p Reality Display, Qualcomm's (NASDAQ:QCOM) Snapdragon S4 Pro quad-core processor, a 13-megapixel camera and technology that makes it waterproof. However, the device has yet to be picked up by a U.S. carrier, though there have been rumors that T-Mobile US (NYSE:TMUS) will carry it. For now, the device is on sale unlocked for $630 at Sony's online U.S. store.

Sony Mobile CEO Kunimasa Suzuki said the company hopes to become the world's third largest smartphone maker behind Samsung Electronics and Apple (NASDAQ:AAPL), an aspiration shared by a number of companies, including HTC, Huawei and LG Electronics. Sony was the 10th largest handset maker in the world in the fourth quarter, according to ABI Research.

"The Xperia range is selling well where available, but Sony's limited retail presence in major markets like the U.S. and China is restricting its growth," Strategy Analytics analyst Neil Mawston told Reuters. "Sony captured less than 1 percent of the valuable U.S. market in 2012."

For more:
- see this Reuters article
- see this Bloomberg article
- see this NYT article
- see this WSJ article (sub. req.)
- see this separate WSJ article (sub. req.)

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