Sony's Image-Sensor Business Hit by Slowing iPhone Sales
June 29 2016 - 2:20AM
Dow Jones News
TOKYO—Sony Corp. on Wednesday warned of a further decline in
image-sensor sales as demand wanes from high-end smartphone makers
including Apple Inc., but the company said it would hit its profit
target thanks to growth in videogames.
Sony said it was on track for operating profit of more than ¥
500 billion ($4.9 billion) in the year ending March 2018, which
would be higher than the ¥ 300 billion yen it has projected for the
current fiscal year ending March 2017.
Presenting an update on the company's midterm business plan,
Chief Executive Kazuo Hirai mixed a bullish forecast on the games
business and a virtual-reality headset to be sold in October with
disappointing news on the sensor business, which he had previously
said would become a leading profit generator for the electronics
and entertainment conglomerate.
"A revitalized Sony-branded consumer electronics business is
expected to provide the foundation for the company's fiscal 2017
targets," Mr. Hirai said.
The slowdown in sales of Apple's iPhone has hit Sony by curbing
demand for its sensors, which are used in the phone's camera.
Initially, Sony projected the sensor unit would achieve sales of ¥
1.3 trillion to ¥ 1.5 trillion in the year ending March 2018, but
it now expects the figure to be around ¥ 1 trillion or slightly
more.
"Management takes this issue very seriously as we have heavily
invested in the image-sensor business," Mr. Hirai said.
He said in the short term Sony hopes to shore up the unit's
profitability by selling more to handset makers in South Korea and
China. In coming years, demand should increase for uses such as
surveillance cameras, drones, smart factories and automobiles, he
said.
Videogames are a brighter story. Sony's flagship PlayStation 4
videogame console has sold more than 40 million units since its
introduction in November 2013, making it the fastest-selling game
machine for Sony and surpassing rivals such as Xbox One from
Microsoft Corp. and Wii U from Nintendo Co. Membership in its
fee-based subscription service, called PlayStation Plus, increased
to 20.8 million in March of this year from 10.9 million in January
2015.
Sony said the division, which also handles internet-based
services such as the online TV-streaming service PlayStation Vue,
would generate revenue between ¥ 1.8 trillion and ¥ 1.9 trillion in
the year ending March 2018, up from a previous forecast of ¥ 1.4
trillion to ¥ 1.6 trillion.
Sony shares were up more than 5% in Tokyo trading Wednesday
after taking a hit last week from the U.K.'s vote to leave the
European Union. Mr. Hirai said he expected to reach the profit
target regardless of global economic conditions including possible
effects of the U.K. referendum.
The British vote could help Sony because it has triggered a
strengthening of the yen against the U.S. dollar. That adds to
Sony's profit because the company has expanded outsourcing of
manufacturing outside of Japan, where the costs are now lower in
yen terms. Sony's projection for the year ending March 2018 assumes
that the dollar would trade at ¥ 113, but it is currently at around
¥ 102.
Sony plans to ship 20 million units of the PlayStation 4 during
the current fiscal year, with momentum likely to be fueled by
releases of blockbuster game titles and a high-end version of the
console.
Macquarie Securities analyst Damian Thong said Sony might also
introduce a slimmer version of the PlayStation. Sony declined to
comment on that possibility. The new variations of the console
might be released at a game show in September, Mr. Thong said.
Mr. Hirai was especially optimistic about PlayStation VR, a
virtual-reality headset system that it plans to start selling in
October. While the device is designed for videogame players, Mr.
Hirai said Sony was looking at a variety of virtual-reality
applications, taking advantage of its existing businesses in
cameras, movies and other areas.
Rivals in virtual reality include Facebook Inc., which sells the
Oculus Rift, and HTC Corp.'s Vive. Sony hopes to get an edge by
offering its headset at a lower price. PlayStation VR is set to
cost $399, while Oculus and Vive cost $599 and $799,
respectively.
Elsewhere, Mr. Hirai said Sony would make a comeback in robots
for consumers. It was one of the first tech companies to introduce
toy robots for consumers with its dog-shaped Aibo, introduced in
1999, but it later dropped the product. Recently, some companies
have introduced consumer-oriented robots, such as SoftBank Group
Corp.'s Pepper.
Mr. Hirai didn't say when the Sony robot would be released or
what specific features it would have, but he said the robot would
be "capable of forming an emotional bond with customers" and would
"inspire love and affection."
Write to Takashi Mochizuki at takashi.mochizuki@wsj.com
(END) Dow Jones Newswires
June 29, 2016 03:05 ET (07:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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