Sony reports best-ever quarterly profit on strong music business
Japan’s Sony Corp. raked in its highest-ever quarterly profit after booking one-time gains related to its acquisition of EMI, though shrinking earnings at the game division could further prompt investors to look for next growth drivers.
Sony has reinvented itself as an entertainment company with stable revenue streams from music content and gaming, after battling years of losses in TV and other consumer electronics that are more susceptible to earnings volatility.
On Friday, Sony said its third-quarter profit increased to 376.99 billion yen ($3.46 billion) from 350.84 billion yen a year earlier.
But the all-time high missed an average estimate of 383.67 billion yen from 10 analysts polled by Refinitiv.
Operating profit at its music business rose to 147.1 billion yen from 39.3 billion yen as it booked a one-time gain of 116.9 billion yen from the EMI deal.
Sony completed the $2.3 billion acquisition late last year to become the world’s largest music publisher.
The gaming business posted a profit of 73.1 billion yen, versus 85.4 billion yen, as the popularity of exclusive titles such as “Marvel’s Spider-Man” failed to offset shrinking sales of the five-year-old PlayStation 4 console.
Investors are already moving beyond their cheer over Sony’s successful reinvention and looking for hints about a successor to the firm’s PlayStation 4 console.
“The gaming business, which has been Sony’s profit driver in the last couple of years, is set to peak out ahead of the launch of the next gaming console,” Ace Securities analyst Hideki Yasuda said. “That’s inevitable due to product cycle.”
Shares of Sony surged to 11-year highs in September, but have since dropped by a quarter.
Sony, however, is confident it will report a record high annual operating profit and reiterated its forecast for 870 billion yen, exceeding an all-time high marked just last year.
Sony’s results follow strong quarterly showing from gaming rival Nintendo Co, which reported a 36 percent jump in operating profit on upbeat software sales of its hybrid home-portable Switch device.
The Kyoto-based gaming company, however, slashed its full-year Switch hardware forecast. (Reuters/NAN)