(Bloomberg) – Sony Group suffered its biggest decline in two years as it lowered its sales forecast for its aging PlayStation 5 game console, underscoring the global electronics slump. Ta.
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Shares fell as much as 8.4% in early trading in Tokyo, the biggest intraday decline since February 2022. On Wednesday, Sony lowered its sales forecast after sales of its flagship PS5 product in the December quarter were about 1 million units lower than analysts expected. , on 8.2 million consoles. The company forecasts sales of 21 million units this fiscal year, a downward revision from its previous forecast of 25 million units.
Sony currently plans to spin off part of its financial services division into a separate company in October 2025 as part of its plan to focus on growing businesses such as entertainment and image sensors. The move would scrap a $3.7 billion take-private deal signed in 2020. The company plans to distribute just over 80% of its financial arm's stake, known as SFGI, to Sony shareholders through dividends in kind, after which they will retain just under 20%. Spin-off.
But on Thursday, investors focused on the lackluster outlook. Rivals Nintendo and Microsoft are expected to launch new hardware in time for the holiday season, increasing the level of competition Sony faces.
“If a platform's growth has already peaked, the outlook for its gaming business could be much more bleak than we thought,” said Amir Anvarzadeh, a strategist at Asymmetric Advisors. This is stated in the research note. “We have long feared that deep-pocketed Microsoft and its subscription service called Game Pass could be highly disruptive to Sony.”
The company expects sales for the current fiscal year to be 12.3 trillion yen ($81.7 billion), down from 12.4 trillion yen previously. The company reported sales of 3.75 trillion yen and operating profit of 463.3 billion yen for the quarter ending December, in line with analysts' average forecasts.
“In the future, PS5 will enter a later stage of its lifecycle,” said Naomi Matsuoka, senior vice president. “Therefore, we will place greater emphasis on the balance between profitability and sales. For this reason, we expect the annual sales pace of PS5 hardware to begin to decline from next fiscal year.”
Despite a strong quarter in software, hardware sales were disappointing. Marvel's Spider-Man 2, released in October as a PS5 exclusive, sold 2.5 million copies in its first 24 hours, making it the fastest-selling debut title from Sony's in-house studio. This, along with Sony's record number of users on its PlayStation Network in December, raised hopes that the PS5 was gaining momentum after years of limited supply.
The key to driving revenue in the gaming division will be maintaining the momentum of the $499 machine. The PS5, which has been on the market since late 2020, has struggled to reach Sony users as production issues and pandemic-related shipping sprees have limited availability. The company released an updated version of the PS5 console in October, making it more compact and more power efficient.
Kazunori Ito, research director at Morningstar, said, “This result shows that Sony spent a large amount of money to promote PS5 sales due to the decline in PS5 profitability, but the number of units shipped in the quarter was lower than expected.'' “It was far below that.”
Beyond the gaming sector, Sony needs to restructure its strategy in India. This comes after a planned merger between the Indian unit and media company Zee Entertainment Enterprises stalled due to disagreements over leadership. The deal was central to Japanese companies' expansion into a market of 1.4 billion people.
Chief Operating Officer Hiroki Totoki said in a post-earnings conference call, “Although negotiations with Gee have not progressed, we believe India is a promising market with high long-term growth potential.'' said. “If there is an alternative to the contract with Zee, we would like to actively consider it.”
—With assistance from Mayumi Negishi and Edwin Chan.
(Updates with analyst comment in 4th paragraph. Corrected time frame for maximum decline in previous article.)
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