Is the King back in the building? Electronics and entertainment giant Sony (NYSE:SNE) just reported earnings for Q1 of fiscal 2007, and the year was a good one. In fiscal 2006, Sony produced a net loss of 7.3 billion yen -- about $65 million -- in the seasonally slow late spring/early summer quarter. This time around, sales ticked up 11% year over year while costs remained rather flat, resulting in improved margins and a total profit of 32.3 billion yen, or $281 million.

Sony is like a keiretsu unto itself, with operational segments as diverse as electronics, financial services, motion pictures, and video games, not to mention part-owner interests in music publishing with Bertelsmann AG and cell phones with Ericsson (NASDAQ:ERICY). At this time last year, the financial services division was the star performer on the bottom line, nearly balancing out the losses from the electronics and gaming divisions.

This time, the insurance and banking operation lost its mojo due to a weak Japanese stock market, and while entertainment revenues shot up by more than 40% on the back of The Da Vinci Code, marketing expenses for upcoming movies and reduced high-margin DVD sales never let that increase reach the bottom line. The internal-performance crown once again rests on the electronics division.

The electronics division is Sony's workhorse, much like its counterparts at Toshiba and Matsushita (NYSE:MC), and consumers worldwide have largely expected to pay a premium for anything carrying the Sony brand name since the first Walkman was released back in 1979. But that segment hasn't been profitable for years, as flat-panel TVs, DVD players, and other consumer electronics seem to have become commodities where brand names play second fiddle to features and pricing. Rivals like Matsushita and Philips (NYSE:PHG) enjoy higher gross margins, which tells me that a piece of equipment from Panasonic or Magnavox can command a similar price to a true-blue Sony, or even higher.

This quarter saw a turnaround in Sony's electronics results, however. Television revenues surged 77%, led by the Bravia line of LCD TVs, and the division squeezed out a 3.7% operational margin. It may not sound like much, but with 1.3 trillion yen in electronics revenue, every margin point makes a huge difference. The 47.4 billion yen ($412 million) the division produced made all the difference between red and black for the entire company.

While Sony's days of premium price points are long gone, new CEO Howard Stringer seems to be doing a great job of tightening operations. If the improvements to operational efficiency continue, the stock's 35% value boost since last year should as well, PlayStation 3 launch issues notwithstanding.

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Fool contributor Anders Bylund 's first CD player was a Sony Walkman. He didn't enjoy that Tom Hanks movie nearly as much as the online games used to promote it. He also doesn't own any stock in any of the companies mentioned today. You can see for yourself , because Foolish disclosure is cool like that.