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Sony Q3 Profits Surge Ahead of PlayStation Virtual Reality Launch

Tokyo ups its bet on games console and VR with creation of new US unit. Film gets boost from Bond but TV and SPE are off

Sony Corp. cruised past analysts’ earnings projections and profits surged in third quarter 2015 results announced Friday in Tokyo.

Games division sales rose 12 percent, powered by strong holiday business for the company’s PlayStation 4, and that was the biggest profit driver. The Japanese electronics and entertainment giant is banking on more of that this year as it brings its virtual reality headset to global consumers.

Friday’s report showed net income was $997 million in the three months ended Dec. 31. That was up slightly from the comparable quarter last year and above the $820 million estimates of most analysts. Sony generated $167 million of operating income on $2.1 billion in sales in the third quarter.

The numbers were boosted by an accounting shift and foreign exchange gains. That offset slower sales of image sensors for cell phones, traditionally a profit generator. Sony is in the process of acquiring Toshiba Corp.’s sensor operations and that could help.

Shares of Sony have fallen 16 percent this year but rose 6.1 percent to $20.89 before the earnings were released.

Sony’s film division climbed  27 percent to 262.1 billion yen in revenue behind “Spectre,” the latest installment in the James Bond franchise that grossed $199 million in the quarter. But overall, Sony Pictures Entertainment, TV productions and its media networks revenue dropped 12 percent and moved from 7.8 billion yen to losses of 11.7 billion yen ($86 million).

sony vrChief Executive Officer Kazuo Hirai is shifting his company’s focus from TV sales and consumer electronics to video games and virtual reality, computer chips and movies.

The company has kept its forecast for the highest annual profit in eight years as sales of PlayStation 4 consoles are helping to offset a slump in smartphone demand — the same one that led Apple Inc. to forecast its first sales decline in more than a decade on Tuesday.

Sony consolidated its PlayStation hardware, software and network operations and created a new U.S.-based company, Sony Interactive Entertainment earlier this week. The move underscores the importance Tokyo puts on its PlayStation operation and comes ahead of the consumer rollout — no later than June 30, Sony said — of PlayStation VR, the virtual reality headset (photo above) compatible with its PlayStation 4 console.

The new operation will be based in San Mateo, Calif., and combines Sony Computer Entertainment, which had been headquartered in Japan and creates hardware and games, and Sony Network Entertainment Interactive, which dealt with the PlayStation Network and was headquartered in the U.S. Andrew House, who currently heads both will head the unit.

The company’s leadership believes its 36 million PS4 consoles and experience in the games realm give it an advantage over Facebook Inc.’s Oculus, a rival VR headset that will require a high-end computer to run and is also hitting shelves this year.