Sony Corp shares leap on record profit forecast

Sony Corp shares jumped to their highest since May 2015 yesterday after a bullish earnings report triggered expectations it could achieve record profit this year.

The Tokyo-based company rose 3% to 3 873 yen at the close in Tokyo after forecasting operating profit of 500 billion yen (R60 billion) for the fiscal year through March 2018, thanks to continued dominance in gaming and strong growth in phone-camera chips.

While that was mostly in line with the 507 billion yen average estimate, analysts from Goldman Sachs Group to Jefferies Group said Sony could surpass its previous record profit of 525.7 billion yen in 1998.

Chief executive officer Kazuo Hirai, who took the helm in 2012, has steered the company through years of restructuring and put more focus on gaming, camera chips and finance.

Nomura Holdings analyst Yu Okazaki said investor interest is now shifting to what Sony will do to fuel further growth, as anticipation builds for the company’s investor day on May 23.

Sony’s stock, which has douPresident bled since 2013, is up 18% this year, outperforming the Topix Index.

Games were a big boost, with operating profit climbing 53% to 135.6 billion yen. Sony is leaning more than ever on its PlayStation business. Operating profits for the division are expected to climb to 170 billion yen, accounting for about a third of total profit, as the company cashes in on the PlayStation 4’s later life-cycle stage, typically the most profitable period for consoles.

For the first time, sales from online games, downloads and streaming services exceeded that of hardware sales, Sony said. PS4’s install base hit 60 million at the end of March. – Bloomberg