Written by Brenda Nakalema

Sony Misses Quarterly Operating Income Estimates

On Tuesday, Japan’s Sony Group released fourth-quarter earnings that missed estimates despite robust results in the company’s game, music and …

On Tuesday, Japan’s Sony Group released fourth-quarter earnings that missed estimates despite robust results in the company’s game, music and movie divisions.

Operating profit in the quarter ended March 31 was more than double, climbing to ¥138.6 billion ($1.06 billion), compared to ¥66.4 billion in the same period only last year. Analysts had estimated ¥148.46 billion. Like many other companies in the industry, Sony (ticker: SONY) has not been a stranger to the supply chain issues that have plagued its contemporaries. The supply chain issues have mostly affected its high-selling PlayStation 5 game console, hurting the company’s revenue.

The PlayStation 5 has been greatly hit by the supply chain hurdles resulting from component shortages and logistics disruptions. However, the company raised some hope by claiming that the unfulfilled demand could be enough to eventually get the PS5 back on track to be the fastest-selling console generation.

According to the company, the expectation is that revenue will drop to ¥1.16 trillion for the current fiscal year, from ¥1.2 trillion. The U.S listed shares of Sony climbed 1.3% in premarket trading on Tuesday to roughly $81.93. However, the stock is down over 36% so far in 2022.

Net income in the fourth quarter climbed 67% to ¥111.1 billion compared to the same period just last year. This was a result of strong revenues from the company’s games, music and movie businesses. Diluted earnings per share for the three-month period were reported at ¥88.98, an increase from ¥53.30 a year earlier. Fourth-quarter revenue rose 1% to ¥2.264 trillion, from ¥2.236.6 last year.

As a result of this poor performance, the company announced that it would repurchase almost 25 million shares over the next year, amounting to 2.02% of the total outstanding. It also went ahead to announce a 200-billion-yen buyback program a year earlier as it reported results.

In June, Sony will roll out new online services for PlayStation users, including an option that is similar to Xbox’s Game Pass subscription offering. “We expect Sony to accelerate the PlayStation 5’s production volume in the fiscal year to recapture the ground, though at the cost of pressure on profit margins,” said Macquarie Capital Securities analyst Damian Thong.