Sony profit slumps 29% on chip weakness but maintains 25 million unit PlayStation 5 target
- Sony reported a 29% drop in operating profit for its second quarter as the company suffered from weakness in its imaging sensor business.
- Sony attributed the significant drop in profit to weakness in its imaging sensor business, as well as declines in profit at its financial services and entertainment, technology and services units.
- The company said on its earnings call that it expects its PlayStation 5 console to hit its target of 25 million units shipped in 2023.
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Sony on Thursday reported a 29% drop in operating profit in the fiscal second quarter as the Japanese electronics giant suffered from weakness in its imaging sensor — or chip — business.
Here's how Sony did in the September quarter versus LSEG consensus estimates:
- Revenue: 2.8 trillion yen ($18.5 billion) versus 2.87 trillion yen expected. That represents an 8% increase year-over-year.
- Operating profit: 263 billion Japanese yen versus 304.4 billion yen expected. That marks a 29% drop year-over-year.
Sony attributed the significant drop in profit to weakness in its imaging sensor business, as well as declines in profit at its financial services and entertainment, technology and services businesses.
The company said profit in its chip division fell over 28% in the fiscal second quarter.
Sony supplies camera chips to consumer technology manufacturing giants like Apple, which uses its semiconductors in its iPhones.
Despite the slide in profit, the company increased its sales forecast for the full year, saying it now expects total sales of 12.4 trillion yen (up from earlier forecasts of 12.2 trillion yen) as it benefits from positive foreign exchange rates.
The Japanese yen has weakened significantly versus the dollar, and Sony makes most of its income outside of the U.S.
Sony also attributed to improvement to its revenue forecast to anticipated bumper performance in its video game, music and imaging and sensing solutions businesses.
Sony is expecting its game and network services business, which is responsible for its popular PlayStation console, games studios and gaming networks, to receive higher-than-expected sales in the full year, boosting performance.
The company has seen a strong start to its newly released Marvel's Spider-Man 2 game, which is exclusive to PS5. The game sold more than 2.5 million copies in its first 24 hours, making it the fastest-selling PlayStation Studios game in history for a 24-hour period.
Sony said it sold 4.9 million PlayStation 5 units in the fiscal second quarter, up from 3.3 million units sold in the fiscal first quarter.
The company said on its earnings call that it expects its PlayStation 5 console to hit its target of 25 million units shipped in 2023. That's an important milestone as analysts and investors were watching for signs of Sony's PS5 performance closely.
Sony's results come after Nintendo earlier this week reported better-than-expected sales and profit for its fiscal second quarter on Tuesday, as it got a boost from the "Super Mario Bros. Movie" and highly anticipated May release of the "The Legend of Zelda: Tears of the Kingdom" game.
In a interview, Sony's Eric Lempel said this would mark the first year that PS5 is "fully stocked" after shortages that plagued the company in 2020 and 2021 due to supply chain constraints.
"We launched [PS5] back in 2020," Lempel told CNBC. "We suffered from the same supply chain issues that everybody was dealing with. Unfortunately, we weren't able to deliver PS5 to ever consumer that wanted one."
Thursday's results follow a fiscal first quarter which saw Sony report a 33% rise in revenue year-over-year to 3 trillion Japanese yen but a 31% year-on-year drop in profit to 253 billion yen.
The company at the time cited weakness in its financial services and pictures division, which saw a small slump on the back of strikes carried out by the Writers Guild of America and other unions, in protest against using artificial intelligence to generate movie scripts.
Sony said that it expects the strike to have an impact on its next financial year, but the firm is engaging in cost control measures to minimize it.
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