Sony Expects Gaming Business Profit as Strong Yen Eats Into Image Sensors

Japan's Sony Corp said on Friday it expects operating profit to fall 8.8 percent in the financial year through March 2019 as a stronger yen eats into profit from the image sensor business.

The electronics and entertainment firm forecast profit to fall to CNY 670 billion ($6.13 billion) from CNY 734.86 billion a year prior, when earnings exceeded the previous peak set in the year through March 1998.

The outlook compared with the 765.04 billion average of 23 analyst estimates compiled by Thomson Reuters.

Sony expects profit at its semiconductor business, which includes image sensors, to fall to CNY 100 billion (roughly Rs. 1.05 lakh crores) from CNY 160 billion a year earlier due to a stronger yen that pulls down profit earned overseas.

Sony's image sensors, central to the company's revival after years of losses in consumer electronics, are used by Apple and other major smartphone makers.

Meanwhile, the gaming business, another driver behind the firm's turnaround, is expected to post profit of CNY 190 billion (roughly Rs. 2 lakh crores), up from CNY 177.5 billion a year earlier, as sales of high-margin online software compensate for slowing console sales.

The gaming business has built up a 70 million-plus user base for its flagship PlayStation 4 (PS4) console which generates strong software sales. Released in late 2013, the PS4 is in the late stage of the traditional five-to-seven-year console life cycle.

Investors have cheered Sony's focus shift under former chief executive Kazuo Hirai away from price competition in consumer electronics, driving Sony's stock price to 10-year highs.

With the turnaround achieved, Sony's new chief executive, Kenichiro Yoshida, is now tasked with consolidating that shift, as well as rebuilding the firm's reputation for innovation after years of restructuring.

In line with that spirit, Sony has brought back "Aibo" more than a decade after it last made the innovative robotic dog.

It has also teamed up with Carnegie Mellon University in the United States to collaborate on robotics research that will initially focus on food preparation, cooking and delivery.

© Thomson Reuters 2018