By Kosaku Narioka
Sony Group reported better-than-expected quarterly profit and played down concerns about surging prices of memory chips used in game consoles, boosting its annual guidance thanks partly to gains from its stake in Snoopy and other Peanuts characters.
The Japanese electronics and entertainment company on Thursday raised profit forecasts for the fiscal year ending March, citing higher earnings from its game and music businesses as well as stronger demand for image sensors used in smartphones.
Sony also said it will book valuation gains of about 45 billion yen, equivalent to $286.8 million, from its existing stake in the owner of Snoopy, Charlie Brown and other characters. The Japanese company in December agreed to double its stake in Peanuts Holdings to 80% for about $460 million.
The earnings beat is the latest sign that Sony Group's yearslong strategy of spending billions on acquisitions to boost its entertainment content is paying off.
That momentum has continued over the past few months. In the most recent move, Sony's music arm last week said it had set up an investment partnership with Singapore's sovereign-wealth fund GIC to acquire music catalogs across a range of genres, as streaming becomes the dominant way music is consumed.
Meanwhile, Sony said in January that it planned to set up a joint venture with Hong Kong-listed consumer electronics maker TCL Electronics Holdings, a move that would mark the end of majority ownership in its television business. The company also spun off its financial business in October to focus on its entertainment businesses.
Sony's stock jumped nearly 6% after the quarterly results and guidance upgrade, then gave back the gains to end roughly flat. Shares have fallen 17% year to date, weighed by concerns about a shortage of memory chips used in game consoles, and about consumers spending more time engaging with generative AI tools rather than playing videogames or watching movies.
Chief Financial Officer Lin Tao said the company is already set to secure the minimum amount of memory chips for consoles needed for the next holiday shopping season--and is working with suppliers to get hold of more. The company will also minimize the impact of pricier memory chips by increasing sales of software and network services, she said.
Tao said Sony plans to proactively use AI in game production, to disrupt the process "rather than to be disrupted."
Partly to show management's confidence in earnings momentum, the company boosted its share buyback to Y150 billion from Y100 billion by May 14, she said.
Earlier this week, videogame rival Nintendo maintained its annual forecasts for Switch 2 sales and earnings following solid quarterly results, buoyed by the popularity of the new gaming device. Nintendo sold 7.0 million Switch 2 consoles in the three months ended December.
Sony said Thursday that in its third quarter, which included the holiday shopping season, operating profit for its game business rose 19% to Y140.84 billion due to higher sales of network services and its own software titles. PlayStation 5 sales fell to 8.0 million units from 9.5 million units a year earlier.
Operating profit for its music business climbed 9.2% to Y106.41 billion, driven by higher revenue from live events and streaming services. Operating profit for its imaging and sensing business increased 35% to Y131.97 billion, thanks to stronger sales of image sensors for smartphones. Its movie and entertainment tech businesses posted declines.
For the three months ended December, net profit jumped 11% from a year earlier to Y377.32 billion, topping analysts' estimate of Y348.2 billion in a poll by data provider Visible Alpha. Revenue also exceeded expectations, rising 0.5% to Y3.714 trillion.
Sony now expects revenue of Y12.300 trillion and net profit of Y1.130 trillion for the year ending March, up 2.2% and 5.9%, respectively. The company previously projected full-year revenue of Y12.000 trillion and net profit of Y1.050 trillion. It reiterated expectations for a Y50 billion tariff hit to operating profit this fiscal year.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
(END) Dow Jones Newswires
02-05-26 0756ET
