Sony Drops Most in Nearly Two Years on Cooling Smartphone Demand

Sony shares fell the most in almost two years after the electronics maker missed profit estimates and forecast weaker sales and operating profits across most of its business units, according to Bloomberg. The stock fell 6.1 percent which has wiped out about $4 billion from the company’s market value.

Sales in the mobile, PlayStation, music, movies, and home-entertainment divisions are forecast to decline in the year to March 2019, the company said in a statement. Only cameras, chips and financial services were seen improving slightly. Operating profit will decline to 670 billion yen ($6.1 billion), below analysts’ prediction for 747 billion yen, according to the outlook.

Analysts expressed concern over the Sony’s weak outlook for phone-camera chips, where it forecast a 39 percent decline in operating profit. Total operating profit was a record 735 billion yen for the year through March. Analysts were projecting, on average, 743 billion yen. Full-year sales rose 12 percent to 8.54 trillion yen.

Cooling demand for smartphones across markets is hitting Sony on two fronts: less demand for mobile-camera chips and poor demand for Sony’s own models. The Xperia division recorded a writedown and forecast an operating loss of 15 billion yen in the coming year. The semiconductor unit will post a 39 percent decline in operating profit, Sony said, even though sales are seen climbing slightly.

CEO Kenichiro Yoshida needs to boost revenue by coming up with new products and services after five years of restructuring that he pushed through as chief financial officer with his predecessor, Kazuo Hirai. While the changes have left Sony on solid footing, the company remains vulnerable to any potential downturn given that it’s the top supplier for image sensors that go into the devices, including Apple’s iPhone.