On Tuesday, Sony reported a 1.1 percent decline in first-quarter operating profit, much lower than market estimates because its gaming business improved as consumers locked in at home, looked for entertainment and downloaded more games. The electronics and entertainment company posted a profit of JPY 228.4 billion (about Rs 16,180 crore) in April-June, up from JPY 230.9 billion (about Rs 16,355 crore) a year ago.
The results compare by JPY 143.21 billion (approximately Rs 10,144 crore) with an average of 10 analyst estimates compiled by Refinitiv. Sony also forecasts profits to fall by 26.7 percent to JPY 620 billion (approximately Rs 43,915 crore) by March 2021, the lowest in four years, but better than the 30 percent drop expected in May.
The impact of the novel coronavirus on Sony is limited compared to that of Japanese electronics peers like Panasonic due to the pursuit of recurring revenue such as subscription fees for gaming content. To accelerate portfolio transfers to such revenue streams, Sony has recently invested in Chinese video sites BilliBilli and Epic Games, creators of the popular video game Fortnite.
Sony has forecast its gaming business to post a JPY 240 billion (about Rs 17,000 crore) profit this financial year, up from JPY 238 billion (about Rs 16,867 crore) a year ago, due to a sharp increase in software sales.
Hideki Yasuda, an analyst at the S Research Institute in Tokyo, told AFP before the results that “lockdowns are affecting Sony’s electronics product line and its production line while hitting theater-release movies.”
“It was a tough quarter for Sony, as the negative factors outweighed the positive numbers. Sony is still expected to recover slowly for the rest of the fiscal year, provided that a second wave of epidemics does not emerge.”
If there is a serious resurgence of the virus, “it will be a different story,” Yasuda warned.
The firm plans to launch its PlayStation 5 console during the last holiday shopping season of the year, seven years after its previous generation games console. Analysts say the upcoming launch has helped keep the company’s share price stable.
While global demand for game downloads has increased this year as lockdowns have forced people to stay home, the epidemic has brought a string of negative factors for Sony, including a slump in production, cancellation of music events and closure of movie theaters.
It expects its image sensor business, which supplies camera sensors to global smartphone makers, including Apple and Huawei Technologies, to earn JPY 130 billion (approximately Rs 9,212 crore) a year, compared to JPY 235.6 billion (approximately Rs 16,692 crore). Before
According to researcher IDC, the global smartphone market is projected to shrink by 12 percent year-on-year in 2020, although the impact of the shrinking market on Sony will be partially offset by smartphone makers adopting multiple-lens cameras.
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