Sony Profit Falls Short of Estimates

Sony’s second quarter profit missed estimates, as a one-time charge and stronger yen weighed on profit from financial services and PlayStation games, according to Bloomberg. Operating profit in the period ended September was 45.7 billion yen ($436 million). That compares with the 49.7 billion yen average of analysts’ estimates compiled by Bloomberg before the company disclosed a 33 billion yen charge from the sale of its unprofitable battery unit to Murata.

Investors will probably look past the one-time charge and focus on Sony’s games division, its main earnings driver. Excluding the impact of a stronger yen, revenue at the unit grew even though it lacked new titles before the launch of a virtual-reality headset and an upgraded version of the PlayStation 4. Sony has relied on games this year to make up for losses at its image-sensor division, where earthquakes in April temporarily shut production of chips used in cameras.

“While the numbers may be below consensus estimates, it actually reflects the impairment from the battery business, so they aren’t that bad at all,“ said Kazunori Ito, an analyst at Morningstar. Chief Executive Officer Kazuo Hirai’s efforts to dispose of unprofitable businesses and restore operations following the April earthquakes appear to be paying off, with Sony shares up more than 10 percent this year, compared with a 8.4 percent decline in the Nikkei 225 Index.

The higher yen, which reduced income earned abroad, and a price cut for the PlayStation weighed on the division’s results, Sony said in the statement. The games unit reported operating profit of 19 billion yen on sales of 320 billion yen. Sony shipped 3.9 million PS4 units in the latest quarter, and maintained its forecast to ship 20 million units in the 12 months through March. “The focus is on the momentum of the PlayStation,“ Damian Thong, an analyst at Macquarie, said before the earnings release. “Image sensors should be back by the December quarter.“

Sony announced the sale of its battery unit for about 17.5 billion yen and transfer of 8,500 workers, resulting in the impairment on its components business. The affected workers represent 6.8 percent of the 125,300 employees Sony had as of March. The company also reduced its profit forecast for the fiscal year by 10 percent to 270 billion yen.