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Looking at the regional markets, China's Shanghai Composite Index is doing well with a 1.4 per cent gain. The Hang Seng is flat with a 0.08 per cent rise, and the Nikkei is up 0.5 per cent, but local electronics manufacturer Sony is down by about 8 per cent on weak PlayStation sales and a cut in revenue forecasts.
Bloomberg reports that Sony slumped as much as 8.6 percent, the most since June 2016 on an intraday basis, after operating income in games fell 14 percent to 73 billion yen ($919 million) for the holiday quarter. The company sold 8.1 million PS4 consoles, compared with 9 million units a year ago. For total sales, Sony lowered its outlook to 8.5 trillion ($1.07 trillion) yen for the fiscal year through March, compared with the prior forecast for 8.7 trillion yen ($1.09 trillion).
Weaker demand for camera chips, mobile handsets and financial services were behind the revision although a tax adjustment will boost net income, the Tokyo-based company said in a statement Friday. Sony's results underscore the struggle at big technology companies, which are seeing slowing demand for their products and services. Apple Inc. reported a decline in revenue for the first time in two years, while chipmakers Intel Corp. and Nvidia Corp. have warned of weaker sales as China's economy starts to sputter and looming uncertainly over Brexit.
Operating profit in the last three months of 2018 was 377 billion yen ($4.7 billion), compared with analysts' projection for 365 billion yen ($4.6 billion). After adjusting for a one-time gain in the music business, the result was significantly lower, at 260 billion yen ($3.27 billion). Quarterly sales fell 10 percent to 2.4 trillion yen ($30.2 billion).
With fewer games in store for the already-aging PlayStation 4 and Sony's own Xperia phone business still bleeding money, Chief Executive Officer Kenichiro Yoshida will have to prove that Sony's turnaround can continue instead of peaking this year. The PS4, headed for its sixth year, will likely surpass the 100 million unit sales milestone by mid-2019, cementing it as one of the best-selling consoles in history. But this year's software lineup is smaller than the record-setting 2018, which saw first-party blockbusters God of War and Spider-Man and third-party hits like Red Dead Redemption 2. This year is mostly focused on a pair of zombie titles, the lesser-known Days Gone scheduled for April and a sequel to the award-winning The Last of Us likely released later this year. For the full fiscal year, Sony kept its forecast for the games division of 310 billion yen ($3.9 billion).
Sony's camera chips business is also seeing an impact from slowing global demand for smartphones. The company's new 48-megapixel image sensor is proving to be a hit with manufacturers including Xiaomi and Huawei, who are promoting it as a key feature in their new models.