TOKYO (Reuters) – Japan’s Sony Corp <6758.T> surprised the market on Tuesday by reporting just a 1.1% profit fall for the cornonavirus-hit first quarter, as its gaming business thrived while consumers locked down at home looked for entertainment and downloaded more games.
The gaming business “saw a positive impact from consumers nesting during the virus outbreak,” Financial Officer Hiroki Totoki said at an earnings briefing.
The electronics and entertainment firm posted April-June profit of 228.4 billion yen ($2.15 billion), beating the 143.21 billion yen average of 10 analyst estimates compiled by Refinitiv.
The firm also forecast profit to fall 26.7% to 620 billion yen in the year through March 2021, its lowest in four years, but better than a drop of at least 30% it estimated in May.
The impact of the novel coronavirus on Sony has been limited compared with Japanese electronics peers such as Panasonic Corp <6752.T> due to its pursuit of recurring revenue such as subscription fees on gaming content.
To accelerate the portfolio shift to such revenue streams, Sony recently invested in Chinese video site Bilibili Inc <BILI.O> and Epic Games, creator of the popular video game Fortnite.
Sony forecast profit at its gaming business to rise marginally to 240 billion yen for this financial year, driven by a sharp rise in software sales in tandem with its PlayStation 5 console launch during the year-end holiday shopping season.
It expects all other business segments to suffer lower profit, including a 45% drop to 130 billion yen in its image sensor business.
Sony, which supplies camera sensors to global smartphone makers including Apple Inc <AAPL.O> and Huawei Technologies Co Ltd [HWT.UL], will cut its three-year sensor investment plan through March 2021 by 50 billion yen to 650 billion yen, Totoki said.
The worldwide smartphone market is forecast to decline 12% year over year in 2020, showed data from researcher IDC.
Sony’s share price has risen 17% this year to its highest in nearly two decades, in a vote of confidence for Chief Executive Kenichiro Yoshida’s ability to maintain momentum after a turnaround led by his predecessor.
Sony also on Tuesday said it would buy back up to 100 billion yen or 1.64% worth of its own shares.
($1 = 106.0600 yen)
(Reporting by Makiko Yamazaki; Editing by Christopher Cushing)