Tokyo — Sony’s quarterly profit topped analyst
estimates, thanks to demand for smartphone camera chips, a healthy music
business and brisk sales of PlayStation 4 consoles and games.
Operating profit was ¥157,6bn ($1.4bn) in the fiscal
first quarter that ended in June, beating analysts’ average projection for ¥133.3bn. Net income was ¥80.9bn, exceeding the prediction for ¥66.5bn.
After a tumultuous year that included an earthquake that crippled camera-chip production, and a $1bn write-down in films, the latest quarter is a return to stability for CEO Kazuo Hirai. The increasing number of PlayStation 4 owners is driving sales of software and online services, while smartphone makers adopt more camera chips per device and more people pay to stream music. Investors are betting that more predictable, stable profits will deliver buybacks and higher dividends.
"PS4 continues to grow, which allows them to sell more games, while recurring revenue from their PlayStation Network is hitting full stride," Kiyoto Utsumi, an analyst at Tachibana Securities, said prior to the release. "Hirai’s background is in the entertainment divisions, and we’re seeing him begin to successfully manage the music and films businesses."
Sales rose 15% to ¥1.86-trillion, beating the prediction for ¥1.73-trillion.
The shares of Sony fell 1.8% ahead of the results, leaving them up 36% in 2017.
During the quarter, Sony finalised the sale of a Chinese subsidiary that produced camera-modules, resulting in a one-time profit of ¥27.5bn. Declining insurance and recovery costs related to the April 2016 earthquake in Kumamoto also provided a one-time benefit of ¥9.3bn.
Games, the biggest division, had a sharp drop in operating profit, which the company blamed on a lack of new first-party titles. Operating profit declined 60% to ¥17.7bn, even as sales rose 5.4% to ¥348.1bn. Sony sold 3.3-million PlayStation 4 units during the quarter, slightly down from 3.5-million in 2016. The company kept its forecasts to sell 18-million units in 2017 unchanged.
The PlayStation 4 is heading into a late-stage life cycle, usually the most profitable period for consoles as new titles are sold to an increasing installed base of owners. But this cycle is even more lucrative due to Sony’s online gaming service PlayStation Network, which charges users subscription fees to play with others and lets them download games, generating higher margins than selling physical copies. Sony increased its full-year outlook for the division, to an operating profit of ¥180bn on sales of ¥1.98-trillion.
Operating profit in chips was ¥55.4bn, recovering from a loss a year earlier, as demand from phone makers increased due to the rising popularity of multiple-sensor models. Sony controls about half of the market for image sensors, the chips that convert light particles into digital photos and videos.
"Demand for Sony’s imaging sensors has been rising further, principally for smartphone use in China," Deutsche Bank analyst Mio Shikanai wrote in a report to clients.
In music, where operating profit grew to ¥25bn, Sony benefited from its partnership with Spotify, which has tripled paying subscribers to 60-million in the past two years. The two companies struck a new licensing deal, which will see more of Sony’s music available only to paying Spotify users, the Financial Times reported in July.
Bloomberg
Operating profit was ¥157,6bn ($1.4bn) in the fiscal
first quarter that ended in June, beating analysts’ average projection for ¥133.3bn. Net income was ¥80.9bn, exceeding the prediction for ¥66.5bn.
After a tumultuous year that included an earthquake that crippled camera-chip production, and a $1bn write-down in films, the latest quarter is a return to stability for CEO Kazuo Hirai. The increasing number of PlayStation 4 owners is driving sales of software and online services, while smartphone makers adopt more camera chips per device and more people pay to stream music. Investors are betting that more predictable, stable profits will deliver buybacks and higher dividends.
"PS4 continues to grow, which allows them to sell more games, while recurring revenue from their PlayStation Network is hitting full stride," Kiyoto Utsumi, an analyst at Tachibana Securities, said prior to the release. "Hirai’s background is in the entertainment divisions, and we’re seeing him begin to successfully manage the music and films businesses."
Sales rose 15% to ¥1.86-trillion, beating the prediction for ¥1.73-trillion.
The shares of Sony fell 1.8% ahead of the results, leaving them up 36% in 2017.
During the quarter, Sony finalised the sale of a Chinese subsidiary that produced camera-modules, resulting in a one-time profit of ¥27.5bn. Declining insurance and recovery costs related to the April 2016 earthquake in Kumamoto also provided a one-time benefit of ¥9.3bn.
Games, the biggest division, had a sharp drop in operating profit, which the company blamed on a lack of new first-party titles. Operating profit declined 60% to ¥17.7bn, even as sales rose 5.4% to ¥348.1bn. Sony sold 3.3-million PlayStation 4 units during the quarter, slightly down from 3.5-million in 2016. The company kept its forecasts to sell 18-million units in 2017 unchanged.
The PlayStation 4 is heading into a late-stage life cycle, usually the most profitable period for consoles as new titles are sold to an increasing installed base of owners. But this cycle is even more lucrative due to Sony’s online gaming service PlayStation Network, which charges users subscription fees to play with others and lets them download games, generating higher margins than selling physical copies. Sony increased its full-year outlook for the division, to an operating profit of ¥180bn on sales of ¥1.98-trillion.
Operating profit in chips was ¥55.4bn, recovering from a loss a year earlier, as demand from phone makers increased due to the rising popularity of multiple-sensor models. Sony controls about half of the market for image sensors, the chips that convert light particles into digital photos and videos.
"Demand for Sony’s imaging sensors has been rising further, principally for smartphone use in China," Deutsche Bank analyst Mio Shikanai wrote in a report to clients.
In music, where operating profit grew to ¥25bn, Sony benefited from its partnership with Spotify, which has tripled paying subscribers to 60-million in the past two years. The two companies struck a new licensing deal, which will see more of Sony’s music available only to paying Spotify users, the Financial Times reported in July.
Bloomberg
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