Sony has reported a quarterly profit for the first time in two years, largely off the back of strong smartphone sales, but the news hasn’t reduced pressure from activist investor Dan Loeb, who wants to see a breakup of the tech giant.
Reuters reports the tech giant reported a profit of 36.4 billion yen (around $409 million) for the quarter to June, largely off the back of strong sales of its Xperia Z series of waterproof Android smartphones.
The quarterly result marks a sharp turnaround from last year, when the company reported a record annual loss of $US 6.4 billion.
In response, incoming chief executive Kazuo Hirai announced 10,000 job cuts alongside a new strategy called “One Sony”, which included an increased focus on its mobile electronics and healthcare businesses, along with the integration of the PlayStation Network across the company’s consumer product line.
By November, Moody’s had downgraded Sony’s debt rating from Baa2 to Baa3, leaving the Japanese electronics giant one notch above junk bond status.
“Without robust restructuring in the coming 12-18 months, Sony’s non-financial services businesses will at best achieve roughly break even, and are also at risk of remaining unprofitable,” Moody’s said in a statement at the time.
In response, the company responded with a plan to partner with Mozilla on Firefox OS in order to increase its low-end smartphone shipments to China, as well as the release of a new high-end waterproof smartphone called Xperia Z.
In May, activist shareholder Dan Loeb, the founder and chief executive of hedge fund Third Point, revealed he had acquired around $US1.1 billion in shares in the struggling Japanese electronics giant.
Loeb subsequently sent a letter to Sony chief executive Kazuo Hirai arguing the electronics giant should spin off its non-core media assets, including its investments in the music and movie industries, in order to focus on consumer electronics.
In a letter to investors sent this week, Loeb commended the result and Hirai’s efforts to turn Sony around, but says the company needs to do more to boost shareholder value.
“Putting these encouraging gains into perspective, they are modest in light of the longer-term challenges facing Sony and the Japanese electronics industry. Drastic – rather than incremental – action is required,” Loeb said in a letter to investors.