Sony rises after surprise profit on PlayStation games
Latest News »
- Donald Trump revisits his Charlottesville comments in angry speech
- Infosys back among top 10 companies by market cap on BSE, NSE
- PSU bank mergers: Putting lipstick on a pig
- Isro to launch back-up navigation satellite on 31 August
- Union cabinet clears transfer of AAI’s 40 acre land to MMRDA for Mumbai Metro
Tokyo: Sony Corp. rose to its highest since November after a resurgent games division helped the Japanese conglomerate blow past quarterly results expectations, vindicating chief executive officer Kazuo Hirai’s growing focus on media and entertainment.
Shares climbed 1.7% to 3,339 yen, bringing its gains for the year to 11%, beating a broader market decline with the Topix dropping 15% in the same period.
Sony, which in years past has scaled back in businesses from phones to televisions, posted a surprise profit for the June quarter. It more than doubled operating income from the sale of PlayStations and software, a particularly optimistic signal given the company’s next marquee products haven’t yet come to market.
Sony is looking to cement its lead over Microsoft Corp. and Nintendo Co. by launching a virtual-reality headset in October in the US, as well as a souped-up version of the PS4 potentially before the end of the year. The twin gadgets mark Hirai’s long-term effort to dominate the industry with the PlayStation division, which he helped launch in 1994 before being tapped as CEO.
“Nothing short of fantastic, especially given that the market has been expecting a loss,” Amir Anvarzadeh, Singapore-based head of Japanese equity sales at BGC Partners Inc., wrote in an e-mail. “The big takeaway was the games business. Profit there more than doubled and that’s even before PlayStation VR launch in October, which will be a huge shot in the arm for hardware sales.”
Sony also said on Friday that it’s expecting an uptick in demand for large-screen TVs beginning in 2018 as consumers replace older units, ahead of the 2020 Tokyo Olympics. The company will seek to grab more domestic market share during the period, Ichiro Takagi, Sony’s executive vice president, said on Friday.
Quake impact reduced
Sony reported net income of 21.2 billion yen ($205 million) in the quarter through June, compared with the average analysts’ expectation for a 39 billion-yen loss. The firm maintained its forecast for annual profit of 80 billion yen.
The strength in games is helping investors look past the impact from the Kumamoto earthquakes, which shut the primary manufacturing site for image sensors that power digital cameras. On Friday, Sony lowered its estimate for operating losses from the earthquakes to 80 billion yen for this fiscal year, from 115 billion yen as recovery efforts wrapped up a month earlier than expected.
While Sony managed to post a rare profit in phones, by dint of reducing its mid-range line-up and retreating from unprofitable markets, it was the games unit that impressed.
Quarterly revenue from that division rose 15% to 330.4 billion yen and profit more than doubled to 44 billion yen. It sold 3.5 million PS4 consoles in the quarter, and kept its annual outlook for sales unchanged at 20 million units. Last month, Sony raised revenue and margin targets for the PlayStation business next fiscal year, as it expects a push into music and video streaming on its gaming network to boost user growth.
“They’re releasing more software and the time is now to harvest profits,” said Hiroyasu Nishikawa, an analyst at Iwai Cosmo Securities Co. “The first year might be a bit tough for VR, but in the long run it will contribute to profits. And by prolonging the life of the PS4, profits should grow.”
Elsewhere, the company trimmed its full-year overall sales forecast to 7.4 trillion yen from 7.8 trillion yen, partly because of currency impacts on businesses including games. Prior to the earnings release, the company on Thursday announced it would sell its batteries division to Murata Manufacturing Co. A price wasn’t disclosed but Sony warned losses were possible and that they weren’t reflected in Friday’s figures.
April’s quakes in Japan walloped the division that makes image sensors used in digital cameras. The unit reported a 43.5 billion yen quarterly loss. And its TV and movie unit posted a 10.6 billion yen loss, narrowing from a year earlier, on higher sales after the release of summer hit The Angry Birds Movie. Bloomberg