Sony raises its profit forecast to $6.7 billion

Bloomberg

Sony Corp. raised its fiscal-year operating profit outlook by 13% to $6.7 billion as its video game unit rode a surge in demand for entertainment from home-bound consumers.
The forecast, up from a previous 620 billion yen, surpassed the average analyst expectation of 658.9 billion yen and precedes the PlayStation 5’s highly anticipated November debut. Sony aims to sell more than 7.6 million PS5 units by the end of March, more than the PS4 managed in its first year, Chief Financial Officer Hiroki Totoki said.
Sony’s outlook hike underscores how the entertainment giant is benefiting from a global Covid-era consumer shift. While sales of its smartphone sensors have been hit by US-Chinese trade tensions, the Japanese company is drawing gamers to its online services.
Sony is betting that the PS5 will help it outdo Nintendo Co. during the all-important holidays and drive growth.

Operating profit for the three-month period ended Sept. 30 rose 14% to 318 billion yen, outstripping expectations. Game software sales in the quarter were 331 billion yen, down from the 432.5 billion of the prior three months. Sony now has 45.9 million subscribers to its PlayStation Plus service, up from 45 million in the prior quarter.
Sony’s revised forecast suggests the company is preparing to take a significant loss from the planned launch of its next-generation PS5, said Ace Research Institute’s Hideki Yasuda. Given the gaming division has already booked 229 billion yen in profit from the first six months, the slight increase expected for the second half of the fiscal year points to a bigger increase in spending, he said.
“Sony will spend a lot of money to deliver many units of the PlayStation 5 to the U.S., probably by air,” Yasuda said. “The hardware would be sold at a slight loss as well.”
Sony Interactive Entertainment Chief Executive Officer Jim Ryan told Reuters the company pre-sold as many PS5 units in the device’s first 12 hours of availability as it did in the PS4’s first 12 weeks.
The novel coronavirus continued to weigh on Sony’s motion picture business, as many theaters around the world remained far shy of capacity, though the unit may be headed for a bump in the next quarter, according to Bloomberg Intelligence analyst Masahiro Wakasugi. This is largely thanks to the runaway success of a Demon Slayer movie released to theaters on Oct. 16, recording the fastest box office debut in Japan with 10.8 billion yen earned in its first 10 days.