Sony Cuts Sales Forecast as Almost Everything Starts to Shrink

Sony cut its full-year revenue outlook as sales of PlayStation 4, televisions and smartphones declined faster than the company originally anticipated, according to Bloomberg.

The electronics maker lowered its own sales target for the year ending March 2020 to 8.6 trillion yen ($79 billion), or 200 billion yen less than a forecast in April, the company said in a statement. The profit outlook was left unchanged.

Sony is predicting annual operating profit will drop for the first time in three years as it steps up investments in games and semiconductors. CEO Kenichiro Yoshida is looking for ways to spark growth. Sony is developing a successor to the PS4 and has partnered with Microsoft on cloud gaming. The CEO is also boosting capital spending to 1.2 trillion yen through March 2021, fueled by investments in smartphone camera sensors.

In games, its most important unit, Sony trimmed its revenue outlook by 4.3% to 2.2 trillion yen after sales fell 3% in the first quarter. The PS4 sales target was cut by 1 million units to 15 million. The company kept the forecast for the segment’s operating profit to fall 10% to 280 billion yen because of rising costs in research and development related to the PS5.

The games division faces a big challenge in topping last year’s performance, when blockbusters drove record earnings. This year’s lineup consists of lesser-known titles and the PS5 won’t go on sale this year, giving competitors a chance to win consumers over with new hardware.

In electronics products, a segment that includes smartphones and TVs, Sony cut its annual revenue outlook by 3.6% to 2.16 trillion yen. The TV target was cut by half a million to 10.5 million units. The company slashed its smartphone sales to 4 million units from 5 million, although it still expects the mobile business to narrow losses to 47 billion yen.

Sony left its full-year profit outlook unchanged, forecasting a 9.4% drop to 810 billion yen. Analysts on average expect a profit of 821.5 billion yen. Operating income in the first quarter was 231 billion yen, more than the 176 billion yen average of analysts’ projections. Sales fell about 1% to 1.93 trillion yen, slightly lower than analysts’ average prediction for 1.94 trillion yen.