Shares of Japanese conglomerate, Sony took a hit, declining by 6% in Tokyo trade following a significant drop in first-quarter profit.
The entertainment giant reported underwhelming showings in its movie and financial divisions, resulting in a 31% slide in operating profit.
Concerns were further fueled by comments from Sony executives about the demand for its games and image sensor units.
Despite the launch of the PlayStation 5 console in late 2020, supply chain disruptions caused by the COVID-19 pandemic hampered availability.
While these issues have improved, Sony revealed that sales fell short of expectations in the April-June quarter. The company aims to achieve sales of 25 million units for the full year.
During the quarter, Sony managed to sell 3.3 million PS5 units. In comparison, Nintendo’s Switch console, which has been on the market for seven years, sold 3.9 million units in the same period, partly due to the popularity of the latest “Zelda” title.
Sony indicated that promotional efforts that began in July are helping boost sales momentum for the PS5.
However, experts like the founder of Kantan Games consultancy, Serkan Toto, expressed concerns, noting that the company needs to accelerate the release of blockbuster first-party games.
The upcoming release of “Marvel’s Spider-Man 2” in October aims to capitalize on the critical year-end shopping season. Its predecessor achieved sales of over 13 million units.
Apart from gaming, Sony is a prominent manufacturer of image sensors used in cameras.
The company revised its expectations for a gradual recovery in the smartphone market, now anticipating a rebound no earlier than 2024 due to sluggish demand in major markets.
This adjustment led to a 10% reduction in the annual operating profit forecast for the sensors division, as lower sales impacted the outlook.
Sony acknowledged that the current financial year will be challenging for the sensors division.
Jefferies analyst Atul Goyal noted the tough circumstances but anticipates higher margins in the subsequent year.
