Sony Corp’s quarterly profit topped analysts’ estimates, thanks to demand for smartphone camera chips, a healthy music business and brisk sales of PlayStation 4 consoles and games.
Operating profit was ¥157.6 billion (US$1.4 billion) in the fiscal first quarter that ended in June, beating analysts’ average projection of ¥133.3 billion. Net income was ¥80.9 billion, exceeding the prediction for ¥66.5 billion.
After a tumultuous year that included an earthquake that crippled camera-chip production and a US$1 billion writedown in films, the latest quarter is a return to stability for CEO Kazuo Hirai.
The increasing number of PlayStation 4 owners is driving sales of software and online services, while smartphone makers adopt more camera chips per device and more people pay to stream music. Investors are betting that more predictable, stable profits would deliver buybacks and higher dividends.
“PS4 continues to grow, which allows them to sell more games, while recurring revenue from their PlayStation Network is hitting full stride,” Tachibana Securities Co analyst Kiyoto Utsumi said prior to the release. “Hirai’s background is in the entertainment divisions, and we’re seeing him begin to successfully manage the music and films businesses.”
Sales rose 15 percent to ¥1.86 trillion, beating the prediction for ¥1.73 trillion.
Shares of Sony fell 1.8 percent ahead of the results, leaving them up 36 percent this year.
During the quarter, Sony finalized the sale of a Chinese subsidiary that produced camera modules, resulting in a one-time profit of ¥27.5 billion.
Declining insurance and recovery costs related to the earthquake in Kumamoto in April last year also provided a one-time benefit of ¥9.3 billion.
Games, the biggest division, had a sharp drop in operating profit, which the company blamed on a lack of new first-party titles. Operating profit declined 60 percent to ¥17.7 billion, even as sales rose 5.4 percent to ¥348.1 billion.
Sony sold 3.3 million PlayStation 4 units during the quarter, slightly down from 3.5 million last year. The company kept its forecasts to sell 18 million units this year unchanged.
The PlayStation 4 is heading into a late-stage life cycle, usually the most profitable period for consoles as new titles are sold to an increasing installed base of owners.
However, this cycle is even more lucrative due to Sony’s online gaming service PlayStation Network, which charges users subscription fees to play with others and lets them download games, generating higher margins than selling physical copies.
Sony increased its full-year outlook for the division, to an operating profit of ¥180 billion on sales of ¥1.98 trillion.
Operating profit in chips was ¥55.4 billion, recovering from a loss a year earlier, as demand from phone makers increased due to the rising popularity of multiple-sensor models. Sony controls about half of the market for image sensors, the chips that convert light particles into digital photos and videos.
“Demand for Sony’s imaging sensors has been rising further, principally for smartphone use in China,” Deutsche Bank AG analyst Mio Shikanai wrote in a report to clients.
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