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Sony flops in Hollywood
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July 31, 1996: 9:12 p.m. ET
Entertainment division has fallen and it can't seem to get up.
From Correspondent Greg Clarkin
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NEW YORK (CNNfn) - Earnings for Sony Corp. soared last quarter thanks to sales of its consumer electronics products. The strong dollar and solid sales of everything from stereos to televisions boosted profits to $159 million.
But while the bottom line for Sony looks good right now, the company is still trying to make its expensive plunge into Hollywood pay off.
Sony bet heavily on Jim Carrey's box office clout. But when The Cable Guy (459K QuickTime movie) called, moviegoers didn't answer. Now, Sony's very costly Hollywood losing streak is extending into the summer season.
After paying almost $3.5 billion for Columbia Pictures seven years ago, Sony has yet to find a successful formula at the box office.
"It's been less than successful, bordering on a disaster. After the $3 billion write-off they took for the poor performance of the previous management team, this summer must be a real disappointment to them." said Stuart Rossmiller, analyst with Deutsche Morgan Grenfell.
Disappointment number one was The Cable Guy, which was good for only $60 million at theaters. Another flop was Castle Rock's Striptease, which brought in only $31 million so far.
And now, Multiplicity is not quite adding up at the box office either, ringing up less than $15 million in ticket sales.
Poor management and big budget flops have some on Wall Street predicting Sony will be forced to spin off its entertainment unit to solve the problem.
"Do they want to spin out to the public and lay off some of the risk on the film side on the investors?" questioned media analyst Porter Bibb of Ladenburg, Thalmann & Co. "A lot of bankers have been recommending they do that and they've resisted."
Sony has said it is considering the idea, but cautions that a spin off is not planned for the near future.
Some Wall Street analysts said the company's venture into Hollywood proves hardware and software don't mix. Others said better management could stop the bleeding.
Either way, analysts said dramatic changes, possibly a partner to share financial risk, are needed. 
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