Sony Eyes Strong PlayStation4 Sales Gains

Sony Corp. on Tuesday predicted strong sales gains in its PlayStation4 and image sensor divisions, aiming to rebuild its troubled electronics arm around these businesses as the once promising smartphone unit joins the company’s TV business in decline.

At a meeting with investors in Tokyo, the company said sales in the videogame business, which includes PlayStation consoles and network services, would grow to a range of Yen1.4 trillion ($12 billion) and Yen1.6 trillion in the fiscal year ending March 31, 2018, up from Yen1.29 trillion in the current fiscal year. For its device segment, which includes the image sensors Sony supplies for Apple’s iPhones, the company is hoping to record sales of between Yen1.3 trillion and Y1.5 trillion, up from Yen890 billion.

Under chief executive Kazuo Hirai and a new chief financial officer, Kenichiro Yoshida, Sony has accelerated a restructuring under which it aims to rebuild around those businesses, along with its entertainment arm, which includes Hollywood studio operations and its music division.

Other operations are expected to show little growth or even sales declines. The TV segment is expected to shrink slightly, to between Yen1 trillion and Yen1.1 trillion from Yen1.2 trillion. The camera business is expected to stay flat, in a range between Yen650 billion and Yen700 billion.

Sony didn’t disclose fiscal 2017 figures for the smartphone business, but executives said sales declines could be steep. The company previously cut its forecasts and wrote down the value of the unit, which has failed to compete with the likes of Apple and Samsung Electronics Co. at the high end of the market, and which has been hit hard in places like China by the rise of low-cost smartphones.

Sony hopes to finish its mobile-segment restructuring in the business year ending in March 2016, making it profitable from the next fiscal year, the company said Tuesday.

“Our urgent task is to make the business profitable even if sales drops by 20% or 30%,” said Hiroki Totoki, head of the mobile business. Sony believes the smartphone industry is already matured, so it plans to focus on marketing on existing customers, instead of new ones, Mr. Totoki said.

In the TV business, the company also said it was aiming for profitability, rather than chasing market share. Sony said it expected to post an operating profit margin of 2% to 4% by March 2018, up from a bare-bones 0.8% in the current year. Even that would be a big improvement for Sony after years of losses in the business, which faces intense competition from manufacturers in South Korea, China and other places.

Sony said it expected the videogame division to show operating profit margins of 5% to 6% by March 2018, up from 2.7% this year. The devices segment is expected to post margins of 10% to 12%, up from the current 7.5%.

While Sony has a history of issuing optimistic forecasts and then falling short, analysts say Mr. Yoshida has shown more urgency about moving to address problem areas by cutting costs or even selling troubled businesses–as Sony did earlier this year with its PC unit.

Source: MarketWatch