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Sony Beats Its Annual Profit Forecast by 5% but Warns on Coronavirus Impact

Sony managed to beat all analyst predictions by 5% for their annual profit outlook. The Japanese company went up to 880 billion yen in profit while 22 analysts from Refinitiv predicted 878 billion yen. 

Also, when looking at the October to December quarter, Sony profit mainly dropped, but it didn’t drop as much as the analysts predicted. The profit dropped 20% to 300.1 billion yen, while the analysts forecasted 271 billion yen.

Sony controls almost half of the world’s smartphone image sensor market. They supply some of the world’s largest smartphone manufacturers like Apple and Huawei. This is Sony’s main income source as in the quarterly profit outlook it accounts for 62% of the profit. It is around 75 billion yen.

To reduce the dependency on smartphone image sensors, Sony is working on entering the automotive applications market.

However, the Japanese company is getting rather worried because of the recent coronavirus outbreak. Sony’s Chief Financial Officer Hiroki Totoki believes that sensor shipments can be disrupted in the case of the virus expands even more. If the virus expands, Sony could be forced to close some of its assembly plants in China. And that could continue on for an unknown amount of time.

Moreover, if the virus spread causes assembly plants to temporarily shut down, this means that the supply chains for PlayStation gaming hardware and other electronics could be rattled.

“We can’t deny the possibility of the virus threat expanding to a scale large enough to wipe out our latest upward earnings revision,” commented Hiroki Totoki.

Additionally, Sony’s gaming business experienced quite a heavy profit decrease of 27% falling down to 53 billion yen. This is because of the sales of their PlayStation 4 declines as it’s in the market for almost six years. Sony will release a new PlayStation 5 later this year. It will have better graphics, more advanced haptic controllers and many other improvements, says Sony.

While this all sounds like it’s the virus’ fault – no, it’s not. In terms of Sony’s stock price, they have been on a constant run-up since 2012. The price back then was as low as $11,74, but now, following very profitable seven years, it is up to $70,48. It is also the highest Sony’s stock price has ever gotten in the past 20 years. 

Sony Beats Its Annual Profit Forecast by 5% but Warns on Coronavirus Impact

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