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TOKYO (Reuters) -Shares in Japan’s Sony (NYSE:SONY) fell 6% in Tokyo trade after first-quarter profit tumbled, with the entertainment conglomerate reporting lacklustre performances by its movie and financial divisions.
Operating profit slid 31% and comments by Sony executives over demand for its games and image sensors units also sparked concern.
The PlayStation 5 console launched in late 2020 but supply was badly affected by supply chain problems during the COVID-19 pandemic. Despite an easing of those snarls, Sony said sales of were below expectations in the April-June quarter. It is targeting sales of 25 million units for the full year.
Sony sold 3.3 million PS5 units in quarter. By comparison, Nintendo’s Switch (NYSE:SWCH) console, which is in its seventh year on the market, sold 3.9 million units in the same period as consumers rushed to play the latest “Zelda” title.
Sony said promotions that began are July are improving sales momentum for the PS5.
“Sony started discounting the PS5 in the West, which is never a good sign,” said Serkan Toto, founder of the Kantan Games consultancy.
“The company has a lot of work to do, first and foremost to make sure those blockbuster first-party games come out quicker.”
“Marvel’s Spider-Man 2” is due for release in October ahead of the key year-end shopping season. Its predecessor has sold more than 13 million units.
Sony, a leading maker of image sensors used in cameras, also revised down its expectations for a gradual recovery in the smartphone market, saying it now does not expect one until 2024 at the earliest due to weak demand in major markets.
The company trimmed cut its annual operating profit forecast for the unit by 10%, citing the impact of lower sales.
Adjustment to procurement by smartphone manufacturers is having a large impact in the second quarter, Sony said.
The current financial year “will be tough” for the sensors division, Jefferies analyst Atul Goyal wrote in a client note, adding that higher margins are expected in the following year.
