TOKYO (Reuters) – Sony’s operating profit fell 29% in the July-September quarter as the company was hit by weaker performance in its financial and image sensor divisions.
Profit for the quarter was 263 billion yen ($1.74 billion). That compares with an estimate of 306 billion yen from 10 analysts surveyed by LSEG.
The Japanese technology conglomerate has grown from the creator of iconic home electronics like the Walkman to an entertainment giant spanning games, movies and music, and is also a leading maker of image sensors.
Profits at Sony’s chip division fell 37%, hit by higher expenses and lower sales of image sensors, which are used in smartphones.
“The North American market shows a significant year-on-year decline and at this time there is no change in our view that there will be a recovery in the market starting in the next fiscal year,” Sony President Hiroki Totoki said at a press conference. .
Sony has maintained its sales target of 25 million PlayStation 5 (PS5) consoles this financial year and the company is looking for a boost with a new, slimmer version of the device.
“It’s not something we can achieve very easily,” Totoki said of the PS5 goal.
The conglomerate sold 4.9 million units of PS5 in the second quarter, bringing sales for this financial year to 8.2 million units. A wearable device that connects to the PS5 via WiFi will be released next week.
Industry observers were surprised by the recent announcement that games chief Jim Ryan will resign next March and developer Bungie will cut staff amid widespread layoffs in the industry.
The Oct. 20 release of “Marvel’s Spider-Man 2” brings joy ahead of the key holiday shopping season, with five million units sold by the end of that month, Sony said.
Rival Nintendo has scored a series of successes in recent months as the company continues to attract gamers despite eschewing the cutting-edge graphics that Sony and Xbox maker Microsoft have pursued.
Sony raised its full-year sales forecast for the gaming unit by almost 5% to 190 billion yen and maintained its profit forecast.
In the second quarter, profits were supported by higher sales of third-party games, but impacted by an increase in hardware losses.
Sony’s film division will co-finance and distribute a live-action adaptation of Nintendo’s iconic “Zelda” franchise, prompting analysts to raise the possibility of further collaboration between two major Japanese entertainment companies.
“Sony’s strong distribution network and publishing history could make it a strategic move for Nintendo,” Jefferies analyst Atul Goyal wrote in a note to clients ahead of Sony’s earnings.
The company kept its full-year operating profit forecast at 1.17 trillion yen, but raised its sales and net income forecasts by 2% each.
Sony shares closed down 0.8% on Thursday ahead of the earnings report. They are up 32% so far this year.
($1 = 151.0600 yen)