(Bloomberg) -- Sony Group Corp. fell as much as 7% after the Tokyo-based tech giant trimmed its profit outlook, reflecting the impact of recession fears on the global gaming industry.
The stock slid its most in almost six months in early trading. Sony said on Friday it now expects 1.11 trillion yen ($8.3 billion) in operating profit this fiscal year, down from 1.16 trillion yen previously. The gaming and network services group, which houses the PlayStation business, accounted for the full revision, taking a 16% cut from 305 billion yen to 255 billion yen.
Sony also revised its outlook on costs related to the acquisition of Bungie Inc., the weaker yen and lower expectations for third-party software sales on the platform.
The company’s games business underwhelmed in the April-June quarter with 47.1 million PlayStation 4 and 5 titles sold, down from 63.6 million a year earlier. Play time across PlayStation products plunged 15% in the quarter, Chief Financial Officer Hiroki Totoki said, and PlayStation Plus members fell slightly to 47.3 million.
“Although they may blame weaker PS5 sales growth of just over 4% YoY for this, the real reason looks to be higher development costs the firm has assumed through its aggressive acquisition of game developers,” said Amir Anvarzadeh at Asymmetric Advisors. “What we think is crucial going forward is how much its newly launched game streaming service, where users have access to hundreds of older games, will eat into its game software sales.”
Investors had sought signs that Sony can weather the current macroeconomic uncertainty by relying on businesses beyond the keystone PlayStation arm. But the company also cut its sales forecast for the image sensors business.
Supply chain snarls will likely continue to trouble electronics makers this year as the re-emergence of Covid infections and Russia’s invasion of Ukraine affect shipping, production capacity and the cost of materials. South Korean giant Samsung Electronics Co. said last week it’s adjusting its forecast on a near-daily basis because of the high degree of geopolitical volatility and economic uncertainty.
Sony’s April-June operating profit of 307 billion yen beat average estimates of 286.7 billion. Movies and music results were boosted by the yen’s weakness and Sony said it now expects higher revenue from its music division because of the positive currency impact. Revenue from streaming services and anime content helped sustain the good results.