Sony’s profits rise as pandemic has people playing games

Sony’s profits rise as pandemic has people playing games
People walk past the logo of Japan’s Sony displayed at the company's showroom in Tokyo on October 28, 2020. (AFP)
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Updated 28 October 2020

Sony’s profits rise as pandemic has people playing games

Sony’s profits rise as pandemic has people playing games
  • Higher revenue from gaming and entertainment content gives validation to CEO Kenichiro Yoshida’s strategy to increase recurring revenue streams

TOKYO: Sony raised its annual profit outlook on Wednesday after posting a record second quarter profit, as its gaming business continued to capture “nesting” demand ahead of the launch of the next-generation PlayStation 5 (PS5) console next month.

The upward revision also reflects a robust start for Japanese animated film “Demon Slayer,” co-distributed by Sony’s music unit, which has been shattering box-office records in Japan since its Oct. 16 release.

Higher revenue from gaming and entertainment content gives validation to CEO Kenichiro Yoshida’s strategy to increase recurring revenue streams that cushion the impact of volatile hardware sales cycles.

Sony is targeting PS5 console sales of 7.6 million units or more in the year through March, chief financial officer Hiroki Totoki said at a briefing, citing the sales achieved for the PS4 when it was launched seven years ago.

But Totoki also warned of major damage to its prized image sensor business from tighter US curbs on Huawei Technologies, which banned global suppliers from selling it chips — such as Sony’s — made using US technology without a special license.

The Chinese smartphone maker was Sony’s second-largest image sensor customer after Apple, accounting for about 20 percent of its $10 billion in sensor revenue, according to analyst estimates.

Despite efforts to diversify customers, a full recovery in profitability at the image sensor business would come only in the year through March 2023, Totoki said.

“It will take considerable time until other customers adopt the trend of high-performance, large-sized sensors led by the Chinese customer,” he said.

Sony raised its annual profit forecast by 13 percent to 700 billion yen ($6.7 billion), after reporting a surprise increase in July-September profit to 317.76 billion yen, a second quarter record.

The outlook is above the 672.33 billion yen consensus of 24 analysts compiled by Refinitiv.

The firm now forecasts its gaming division will post an annual profit of 300 billion yen, up from the previously estimated 240 billion yen.

Consumers’ shift to gaming software downloads and online subscription services during coronavirus lockdowns boosted profits despite the PlayStation 4 console coming to the end of its lifecycle.

Such high-margin online revenue is likely to help Sony’s gaming business stay profitable this year, outweighing massive marketing and production costs associated with the new console launch.

Sony pre-sold as many PS5 consoles in the first 12 hours in the United States as in the first 12 weeks for its predecessor PlayStation 4 device, Jim Ryan, CEO of Sony Interactive Entertainment, said in an interview.

“The demand as expressed by the level of pre-order has been very, very considerable,” said Ryan.

For its sensor business, Sony cut the profit outlook by 38 percent to 81 billion yen, further trimmed its three-year investment through March next year by 40 billion yen to 650 billion yen, and said it may slow a production ramp-up at a new plant in Nagasaki, southern Japan.


NCB plans to issue dollar-denominated sukuk

NCB plans to issue dollar-denominated sukuk
Updated 17 January 2021

NCB plans to issue dollar-denominated sukuk

NCB plans to issue dollar-denominated sukuk
  • The number and value of any sukuk to be offered will be determined based on market conditions
  • Offering of the sukuk will be limited to qualified investors, the bank said

National Commercial Bank (NCB) announced the intention of NCB Tier 1 Sukuk Ltd., an exempted company with limited liability in the Cayman Islands, to issue US dollar-denominated additional Tier-1 sukuk, the bank said in a statement to Tadawul today, Jan. 17.

NCB mandated Citigroup Global Markets Ltd., Emirates NBD Capital, Goldman Sachs International, J.P. Morgan Securities, MUFG Securities (EMEA), NCB Capital and Standard Chartered Bank as joint lead managers and bookrunners for the potential offer.

The potential offer aims to enhance the bank's Tier-1 capital, and in addition it will be used for general corporate purposes.

The number and value of any sukuk to be offered will be determined based on market conditions, the statement said.

The potential offer will be subject to approvals from the relevant regulatory authorities and will be made in accordance with the applicable laws and regulations.

Offering of the sukuk will be limited to qualified investors, the bank said, adding that any material developments will be announced in due course.