Home Tech News Sony expects annual profit to drop

Sony expects annual profit to drop

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Base on current report reaching our tech news room shows that Sony expects annual profit to drop… Meanwhile Japan’s Sony Corp warned its annual operating profit would drop, after two years of record highs, as its previously thriving gaming business slows and its PlayStation 4 (PS4) console nears the end of its lifecycle.

It is reported that the bleak outlook comes amid concerns that a turnaround is losing steam at Sony – which has shifted its focus to movies, music and gaming for stable revenues, after battling years of losses with consumer electronics such as TV sets that are more susceptible to price competition.

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Analysts widely expect Sony to launch a next-generation console in 2020 to supplement slowing sales of the five-year old PS4, but the lucrative business could face tough competition with new video game streaming services from Alphabet Inc’s Google and Apple.

The electronics and entertainment firm forecast profit for the year through March 2020 at 810 billion yen ($7.25 billion), down 9.4 percent from 894.2 billion yen a year prior.

This compares with an average forecast of 834.49 billion yen from 22 analysts polled by Refinitiv.

Sony’s gaming business is forecast to post a profit of 280 billion yen, versus 311 billion yen a year earlier.

The semiconductor business, which includes image sensors, is expected to report a profit of 145 billion yen, compared with 144 billion yen a year earlier. Sony’s image sensors, central to its revival after years of losses in consumer electronics, are used by Apple and other major smartphone makers.

Reflecting growing worries over Sony’s strategy, shares of the company have lost more than 30 percent from their 11-year highs set in September last year.

Reuters reported Daniel Loeb’s hedge fund Third Point LLC is building a stake in Sony again to push for changes that include shedding some businesses.

Third Point wants Sony to explore options for some of its business units, including its movie studio, which the fund believes has attracted takeover interest, according to sources familiar with the matter.

“We believe recent reports of activist investors’ interest and stake acquisition is likely to put significant, desirable and sustained pressure on Sony to act,” Jefferies analyst Atul Goyal said in a note to clients last week.

Sony CEO Kenichiro Yoshida “made some very tough but desirable decisions” to revive the company when he was finance chief, his decisions since he became CEO “appear slightly benign”, the analyst added.

The company should exit the money-losing smartphone business, while keeping the pictures business, which has potential for a turnaround, Goyal added.

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