Whatās Going On Here?Japanese entertainment giant Sony cut its full-year profit outlook on Friday. What Does This Mean?First, the good news: Sonyās operating profit grew by a better-than-expected 10% last quarter from the same time last year. That was partly thanks to strong results from its movie and music segments, and partly down to a weak yen that meant international profits were worth more when converted back. But Sonyās gaming business was a shambles: the company sold 26% fewer games, and barely sold any more PS5s because itās still not producing enough of them. No surprises, then, that the segmentās profit was down 37% from the same time last year. Sony slashed its annual profit outlook for the segment by 16% too, potentially because it doesnāt have enough high-profile titles in the works or that ā ew ā gamers are spending more time outdoors. And since its gaming segment makes up around a quarter of its overall business, the company slashed its overall profit outlook by 4% too. Why Should I Care?Zooming in: Optimism only goes so far.
Sony isnāt giving up on its target of selling 18 million PS5s this financial year, promising to bring shipments forward so thereās plenty to go around by Christmas. But itās setting its sights lower elsewhere in its business: it cut its revenue forecast for its camera image sensors, as the war and Covid continue to impact shipping, production, and costs. Sonyās not the only one: South Korean giant Samsung Electronics warned late last week that it was adjusting its forecasts almost daily because of all the uncertainty.
Zooming out: An investment in the future.
Some of Sonyās production struggles can be put down to the chip shortage, which is something the US has been dealing with too. Thatās why the US government finally passed a long-awaited bill late last week that should boost its chipmaking industry, with around $52 billion in subsidies for production and $200 billion to boost research over the next decade. | 