Sony beats profit estimates
Sony Corp. reported third-quarter profit and sales that beat analyst estimates as earnings from the booming PlayStation game business helped offset slowing demand for chips that power smartphone cameras.
Net income was 120.1 billion yen ($997 million) in the three months ended Dec. 31, Sony said on Friday. That was more than the 91.1 billion yen average of four estimates compiled by Bloomberg. The company posted a 90 billion yen profit a year earlier. Sony has relied on image sensor demand to bolster profits while Chief Executive Officer Kazuo Hirai shifts focus from consumer electronics to chips, video games and movies. The company has kept its forecast for the highest annual profit in eight years as sales of PlayStation 4 consoles help shield earnings from a slump in smartphone demand that led Apple Inc. to forecast its first sales decline in more than a decade.
"The year-end shopping season was a tremendous boon for the game business. We are starting to see major blockbuster titles come out," Hideki Yasuda, an analyst at Ace Research Institute in Tokyo, said prior to the earnings announcement. "Image sensors are a negative as falling smartphone output damps chip demand. The next impetus will hinge on Apple's iPhone 7."
Sony generated 202.1 billion yen of operating income on 2.58 trillion yen in sales in the third quarter. That compares with a 173.6 billion yen profit and 2.53 trillion yen revenue estimated by the analysts.
Shares of Sony rose 6.1 percent to 2,523 yen before the earnings were released. The stock has fallen 16 percent this year. While Sony kept its full-year forecasts unchanged for the whole company, including operating income of 320 billion yen, it increased projections for games on higher network sales while cutting expectations for the devices unit that produces image sensors. The game business had a quarterly operating profit of 40.2 billion yen and Sony raised the full-year projection by about 6 percent to 85 billion yen.
Sony is sharpening its focus on streaming and online game services by bringing its PlayStation hardware, software and network operations under one roof. Sony Interactive Entertainment LLC will begin operations from April 1, based in San Mateo, California.
Sony has said it will launch PlayStation VR, a virtual reality headset, by June 30. The company's nearly 36 million-strong global base of PS4 consoles may give it an advantage over rivals like Facebook Inc.'s Oculus, which require a highend computer to run. Sony can also leverage two decades of experience working with game studios and already has more than 100 titles in development. About 7 million VR headsets will be sold by the end of 2016, according to market researcher IHS Technology. By 2020, the market is expected to reach $2.6 billion with 37 million headsets sold.
The devices unit had a loss of 11.7 billion yen in the quarter after Sony took a 30.6 billion yen impairment on its battery business. The fullyear operating income forecast for the business was cut to 39 billion yen from 121 billion yen. The film division was its fastest-growing in the quarter, with revenue climbing 27 percent to 262.1 billion yen.