Sony Targets $1.8B Share Repurchase To Make Up For The Profit Miss: Bloomberg

Sony Group Corp SONY will repurchase up to $1.8 billion (200 billion yen) shares after posting quarterly profit below expectations, Bloomberg reports.

Earnings: The March quarter operating profit of 66.5 billion yen missed the analyst estimate of 74 billion yen. Sony sold 3.3 million PlayStation 5 consoles during the quarter, totaling 7.8 million for the fiscal year at a slightly faster rate than the previous hardware generation.

Sony plans to sell over 14.8 million units in FY21, partially offset by the ongoing production bottleneck, stated CFO Hiroki Totoki.

The pandemic-induced remote activities drove the company’s game sales last year, leading to phenomenal subscriber additions to the PlayStation Plus service. However, the ongoing semiconductor chip crisis hampered the production of its latest console launched in November.

PlayStation 4 games continued to drive a significant chunk of its revenue.

Sony’s shares have jumped since the March 2020 slump from higher gaming and mobile activity. The shares gained 3.1% ahead of the earnings on Wednesday. The company has earmarked funds to repurchase up to 2.02% of its stock.

Revenue from the PlayStation business and the music segment’s smartphone games missed the consensus estimate despite the pandemic resurgence.

Apple Inc’s AAPL latest iPhone launch boosted Sony’s image-sensor division despite the loss of high-volume client Huawei Technologies Co.

Oppo and Vivo might opt for cheaper component alternatives following the Chinese smartphone business recovery, to Sony’s dismay.

Xiaomi Corp’s XIACF XIACY adoption of Samsung Electronics Co Ltd SSNLF camera sensor for the former’s latest flagship Android device, the Mi 11 Ultra, further insinuates towards growing competition for Sony.

Guidance: Totoki expected the initial PS5 sales target for FY21 to beat the PS4’s second-year performance.

Sony’s operating income estimate of 930 billion yen in FY22 reflected a decline in gaming, music, and image sensor businesses. The company expects an operating income of 971.9 billion yen for FY21.

Price action: SONY shares traded lower by 1.19% at $104.40 on the last check Wednesday.

Image Courtesy: Wikimedia