Sony Reports Record Profits, No Mention Of Audio Or TV’s
Sony Group, which is fast becoming a major content Company, spanning entertainment and gaming has tipped a US$10.6 billion profit, 26% up over the previous year despite slowing sales of PlayStation consoles.
Overall sales rose 13% to over three trillion Yen, with the big contributor being its motion picture and music streaming businesses.
In particular, the release of “Spider-Man: No way home” in December pushed up revenue for the third quarter, with global box office proceeds for the movie reaching a record US$1.7 billion.
Executives admitted that Sony’s mainstay gaming business, from which it gets nearly 30% of its revenue, is slowing as COVID-driven demand wanes and the ongoing chip shortage limits supplies of its PlayStation 5.
From April to September, Sony sold 5.6 million PS5 sets, just 38% of its sales target for this fiscal year.
Management claimed that Sony expects to sell 11.5 million units of PS5, fewer than the 14.8 million that it had previously forecast.
Competition in the gaming has got intense recently Sony and Microsoft snap up smaller rivals, hoping to gain an edge in the hunt for new customers.
There was no mention of TV or audio sales.
On Jan. 18, Microsoft announced plans to buy Activision Blizzard for $69 billion.
This sent Sony shares plummeting 13% the next day as investors worried that stiffer competition could weigh on its earnings.
Sony struck back this week by buying Bungie, the game maker behind both “Halo” and “Destiny,” for $3.6 billion.
Totoki said the purchase will allow Sony to acquire Bungie’s knowledge and creative talent in live gaming while Bungie can explore opportunities to expand its offerings into to music and motion picture on Sony’s platforms.
Sony had previously forecast an increase of 9% to 1 trillion yen in operating profit for the year.
Overall Sony’s net profit fell 20% to 771 billion yen, as the effect of tax cuts in the previous fiscal year dissipated.
The Company that is about to release a new TV which observers at CES said is the best they “have delivered in several years” was able to boost sales during the COVID pandemic because of restructurings under former and current CEOs, Kazuo Hirai and Kenichiro Yoshida.
Closing unpromising segments such as its Vaio laptops and curtailing its ambitions for the Xperia mobile phones allowed Sony to strengthen its financial position to make more strategic investments to compete executives claim.
In a midterm management briefing last night in Tokyo, Sony had said it aimed to pour 2 trillion yen into strategic investments through the fiscal year ending March 2024.
Chief Financial Officer Hiroki Totoki said in a news conference on Wednesday that the conglomerate had already spent 850 billion yen, including on its latest investment in U.S. game maker Bungie.
“We are on the right track to evolve our business portfolio into one that enables us to achieve long-term growth,” Totoki said.
As part of its move to expand its businesses, Sony announced in January that it will set up a subsidiary called Sony Mobility Inc. to focus on electric vehicles. However, Totoki stressed that the company will not invest heavily in this field.
“We will not start making batteries or vehicles ourselves,” said Totoki. “We take a stance of ‘asset-light’ and will proceed with electric vehicle investment on the premise that we form partnerships.”
Shares in Sony on Wednesday rose 5%.