Get the latest updates on Sony Corp for free
Subscribe to our myFT Daily Digest email and receive daily Sony Corp news updates.
Similar to the valiant soldiers in “Call of Duty,” PlayStation has the potential to save the day for Sony’s earnings this fiscal year.
Sony investors have raised concerns about various aspects of the conglomerate, including its struggling financial services business, declining demand for image sensor chips, and intense competition among console manufacturers. The recent first-quarter results only confirmed these fears. However, Sony expects its PlayStation division to lead the way for the rest of the year.
In the period ending June, operating profit declined by 31 percent to ¥253bn ($1.8bn). This decline was primarily attributed to the poor performance of Sony’s financial business and a significant drop in earnings from its film unit due to higher marketing costs. Additionally, the global slowdown in smartphone sales resulted in an 11 percent decline in Sony’s image sensor chip business. A market recovery is not anticipated until after 2024.
Despite these challenges, Sony aims to sell a record-breaking 25 million PlayStation 5 consoles in the current fiscal year. This target seems achievable considering Sony’s ability to lower prices and historical sales surges resulting from price reductions. The company also anticipates a boost in sales during the year-end holiday season, as the PS5 was the most popular console in the US last Christmas.
Sony already sold a record 19.1 million PS5 consoles in the previous fiscal year. Additionally, the depreciation of the yen since January is expected to enhance the company’s revenue. This explains the 2 percent increase in Sony’s full-year net income forecast. The strength of Sony’s gaming division, which is the largest contributor to overall revenue, helps offset weaknesses in other areas of the company.
With a 28 percent increase in share value this year, outperforming Japan’s market indices, Sony’s shares are currently trading at a reasonable value of 17 times forward earnings. This is approximately half of their value from three years ago.
During the business cycle troughs, Sony’s gaming business serves as a valuable hedge, particularly for industries like semiconductors. If PlayStation continues to perform well, with the release of a blockbuster game preferably, Sony’s valuation could start to regain some of its lost premium.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
