Sony’s profit drops 29% due to chip weakness but keeps its 25 million unit PlayStation 5 target.
On Thursday, Sony disclosed a 29% decline in operating profit during the second fiscal quarter, with the Japanese electronics conglomerate attributing this decline to challenges in its imaging sensor, or chip, sector.
Here’s a summary of Sony’s performance for the September quarter compared to the consensus estimates of the London Stock Exchange Group (LSEG):
- Revenue: 2.8 trillion yen ($18.5 billion) versus an expected 2.87 trillion yen, marking an 8% year-over-year increase.
- Operating profit: 263 billion Japanese yen versus the expected 304.4 billion yen, representing a 29% year-over-year decrease.
Sony cited the substantial profit drop to weaknesses in its imaging sensor business, as well as profit declines in its financial services, entertainment, technology, and services divisions.
In the fiscal second quarter, Sony’s chip division witnessed a reduction in profit of over 28%.
Sony is a supplier of camera chips to major consumer technology manufacturers like Apple, which incorporates its semiconductors in its iPhones.
Despite the profit decrease, the company has revised its full-year sales forecast upwards, now projecting total sales of 12.4 trillion yen (up from the earlier estimate of 12.2 trillion yen) thanks to favorable foreign exchange rates.
Sony’s increased revenue forecast is also attributed to expected robust performances in its video game, music, and imaging and sensing solutions segments.
Sony anticipates higher-than-anticipated sales in its game and network services business, which encompasses the popular PlayStation console, game studios, and gaming networks, boosting its overall performance.
The company has experienced a strong start with its newly released game, Marvel’s Spider-Man 2, exclusive to PS5, selling over 2.5 million copies within the first 24 hours, setting a record as the fastest-selling PlayStation Studios game in a 24-hour period.
In the fiscal second quarter, Sony reported selling 4.9 million PlayStation 5 units, up from 3.3 million units in the fiscal first quarter.
Sony revealed on its earnings call that it expects to achieve its target of shipping 25 million PlayStation 5 consoles in 2023, a significant milestone closely watched by analysts and investors.
This announcement comes on the heels of Nintendo reporting better-than-expected sales and profits for its fiscal second quarter, attributed to the “Super Mario Bros. Movie” and the highly anticipated release of “The Legend of Zelda: Tears of the Kingdom” game.
In an interview, Sony’s Eric Lempel expressed that this year would mark the first time the PS5 is “fully stocked” after facing supply chain constraints in 2020 and 2021, which hindered the company from meeting consumer demand.
These results follow Sony’s fiscal first quarter, which saw a 33% rise in revenue year-over-year to 3 trillion Japanese yen but a 31% year-on-year decline in profit to 253 billion yen. Sony attributed this performance to weaknesses in its financial services and pictures division, partly due to strikes by the Writers Guild of America and other unions protesting the use of artificial intelligence to generate movie scripts. Sony expects these strikes to impact the next financial year but is implementing cost control measures to mitigate their effects.
