Sony Corp. said a profit that exceeded estimates on strong demand for its gaming products, but offered a measured forecast for the fiscal year due to uncertainty over the coronavirus pandemic.
The Tokyo-based company said operating profit for the quarter ended June was 228 billion yen ($ 2.15 billion), compared to an average analyst estimate of 137 billion yen. The company expects operating profit for the year ending March of 620 billion yen, compared to 654 billion yen. Sony also said it would repurchase up to 1.64% of its shares for 100 billion yen.
The Japanese tech giant is gearing up to launch the latest generation of its PlayStation game console this holiday season, which has slashed sales of existing hardware. Still, Sony is forecasting strong sales for the PlayStation 5, recently asking suppliers todouble production, and the last quarter clearly showed that the coronavirus is fueling demand for games as many people are stuck at home.
“The result of the PlayStation Unit, which showed superb software sales that even exceeded momentum during the recent holiday season, is clearly a big positive surprise,” Hideki Yasuda said. , analyst at Ace Research Institute. “People’s reluctance to go out is likely to persist for months, a strong tailwind for the Sony gaming unit that will last at least through this fiscal year.”
Read more:Sony Boosts PlayStation 5 Production To Meet Soaring Virus Demand
In a call with investors, senior executives at Sony made it clear that the environment is difficult and that they will have to adapt to the fallout from the Covid-19 epidemic.
“This exercise will be important not only for how we recover from the impact of Covid-19, but also for how we change our strategy to better adapt to a post-corona world,” said Hiroki Totoki , chief financial officer of the company. “Those who survive will not be the strongest, but those who are ready to make changes.”
A PlayStation Unit official, who asked not to be identified because the plan is not yet public, said Sony’s next announcement for the PlayStation 5 is tentatively scheduled for this month. The company intends to release two versions of the console, one with a Blu-ray disk reader and one without, although he has yet to disclose the price of either model.
“I think the core early adopters of Sony PlayStation will quickly appropriate the first million units,” said Damian Thong, analyst at Macquarie Capital. “With backward compatibility, their existing game library will work with the new console, so the new machine would be usable immediately.”
Thong said he expected the standard PlayStation 5 unit to be priced at $ 500 and the disk reader-less would be sold for $ 400. In total, he said, Sony will sell more than 6 million units of PlayStation 5 consoles by the end of March next year.
Gaming software was a highlight for Sony during the quarter, with subsidiary Naughty Dog releasing The Last of Us Part II in June. The game racked up over 4 million sales in its first three days, making it the best-selling first game exclusive on PlayStation 4. Ghost of Tsushima, released on July 17, has already sold at 2 , 4 million copies in three days, the company says.
Highlighting its commitment to the gaming industry, Sony recentlyinvested $ 250 million inEpic Games Inc., the owner of Fortnite and the Unreal game development engine. The latter is called to play an important role in the creation of future PlayStation 5 titles.
Read more:Sony invests $ 250 million in Unreal Engine Maker Epic Games
Sony projected lower results for its image sensors business, a traditionally fast-growing division that supplies camera technology to companies like Apple Inc. It expected the unit’s operating profit for the year current would be around 130 billion yen, compared to 235.6 billion yen. a year earlier, due to low demand from the coronavirus.
“The global economic downturn resulting from Covid-19 is hurting the demand for high-end smartphones, and therefore our image sensor lines optimized for these customers,” Totoki said. “In the long term, we still believe that demand for high-end smartphones and image sensors will return, but for this year and next, we will have to align our strategy with more mid-range and lower-end smartphones. “
(Updates with CFO comments from sixth paragraph)