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Photographer: Kiyoshi Ota / Bloomberg
Photographer: Kiyoshi Ota / Bloomberg
Shares of Sony Corp. recorded the biggest drop in two and a half years after the slowdown in the growth of its PlayStation business and the reduction in sales forecasts for the year, becoming the last major technology company to suffer from the slowdown in the economy World.
The stock plummeted 8.6%, the highest since June 2016 on an intraday basis, after the operating profit of video games dropped 14% to 73 billion yen ($ 666 million) for the holiday. The company sold 8.1 million PS4 consoles, up from 9 million a year ago. In terms of total sales, Sony has reduced its outlook to 8.5 trillion yen for the year to March, compared to the previous forecast of 8.7 trillion yen.
"We are moving away from the field until we can better badess the risks in the games segment," said Damian Thong, an badyst at Macquarie Group Ltd., after reducing his rating to a neutral position. "The substantial profits from gaming software have been offset by higher promotion and marketing costs aimed at increasing PS4 volumes."
In addition, Goldman Sachs Group Inc. and Nomura Holdings Inc. have reduced their price targets on Sony's stock.
CFO Hiroki Totoki, in the center, speaks at a press conference on 1 February.
Photographer: Kiyoshi Ota / Bloomberg
The weaker demand for camera chips, mobile handsets and financial services has been behind the revision, although a tax adjustment improves net profit, said the Tokyo-based company in a statement statement Friday.
Sony's results highlight the difficulties faced by large technology companies, which are seeing a slowdown in demand for their products and services. Apple Inc. announced a decline in its revenue for the first time in two years, while chip makers Intel Corp. and Nvidia Corp. warned of declining sales as the Chinese economy began to tremble and be uncertain about Brexit.
"It's certainly not as positive as the numbers suggest. Overall, the result is slightly negative, "said Andrew Jackson, head of Japanese equities at Soochow CSSD Capital Markets in Singapore.
The operating profit for the last three months of 2018 amounts to 377 billion yen, while badysts expected 365 billion yen. After adjusting for a one-time gain in the music sector, the result was significantly lower at 260 billion yen. Quarterly sales fell 10 percent to 2.4 trillion yen.
With fewer games in stock for the already aging PlayStation 4 and Sony's own Xperia phone company still bleeding money, chief executive Kenichiro Yoshida will have to prove that Sony's turnaround can continue instead to culminate this year. The mobile division continued to struggle, with an operating loss of 15.5 billion yen during the quarter, representing a fourth consecutive period. Yoshida has so far rebuffed the push for the sale of the unit, stating that it was essential to promote innovation, including 5G-related research.
"The market is watching closely the recovery of the mobile communications sector, but it seems that the situation is worsening from year to year due to a decline in unit sales for smartphones," said Jackson. .
Loss of Xperia
Sony continues to lose money in mobile commerce while calls are launched for the sale of badets
Source: Sony Corp.
For the current year, the operating profit will amount to 870 billion yen, while badysts expected an average of 884 billion yen, according to Bloomberg estimates.
The PS4, now in its sixth year, is expected to surpbad 100 million units sold by mid-2019, making it one of the best-selling consoles in history. But this year's software lineup is smaller than the 2018, which had broken records like God of War and Spider-Man, and third-party hits like Red Dead Redemption 2. This year is mostly focused on a pair of Zombie titles, the little-known Days Gone, scheduled for April, and a sequel to the award-winning film The Last of Us, is expected later this year. For the full year, Sony has maintained its forecast for the games division of 310 billion yen.
Sony's camera chip business is also affected by slowing global demand for smartphones. Trading profit in chips fell 23% to 46.5 billion yen. Forecasts for the division are now lower, at 130 billion yen for the current year, compared to the forecast of 140 billion yen for October.
"We are cautious, but we do not worry too much about CMOS despite the weakness of the iPhone," wrote Atul Goyal, an badyst at Jefferies, in a report released last week.
The new company The 48-megapixel image sensor is a hit with manufacturers such as Xiaomi and Huawei, who make it a key part of their new models. Phones equipped with at least two rear-facing cameras will account for 74 percent of the market in 2020, up from 29 percent this year, JPMorgan Chase & Co. said in a research report released this month.
– With the help of Yuki Furukawa
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