Sony beats profit es­ti­mates

The Pak Banker - - 6BUSINESS -

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.

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