American Marconi Wireless News - Sony hikes profit outlook on strong gaming earnings

For the year to next March, the PlayStation maker expects net income of 1.21 trillion yen ($7.5 billion), up from 1.16 trillion yen projected before.

Overall, Sony projected group revenues in the year to March 31, 2027 of 12.5 trillion yen, up from the previous forecast of 12.3 trillion issued in May.

Sony said that it is also benefiting from favourable foreign currency effects -- the yen has been trading around a 40-year low against the dollar -- and tariff refunds by the United States.

The video games sector is fragile, as console manufacturers' margins are eroded by soaring memory chip costs driven by the artificial intelligence boom.

Sony on Friday indicated that it has sufficient components to meet planned production levels for its PlayStation 5 during the current fiscal year.

The upcoming launch of "Marvel's Wolverine" in September and "Grand Theft Auto VI" in November -- predicted to be the biggest release in gaming in years -- are also expected to help the company.

Sony and other console makers have also been passing on the rising costs of memory to customers, which hurts demand.

The US video game market market in June saw a 21-percent drop, according to research firm Circana, while costs for developing games are rising.

US studio Bungie, creator of "Halo" and "Destiny", acquired by Sony in 2022, said in June it would cut a "significant" number of jobs.

US giant Microsoft announced in early July the elimination of 4,800 jobs, including 3,200 in its Xbox gaming division this year and next.

Against this backdrop, Yasuo Nakane of Mizuho Securities suggested last month that a next-generation Xbox console was "unlikely".

"That would be positive for Sony, as it would give the company more flexibility regarding the launch schedule and pricing" of its potential future PlayStation 6 console.

Analysts predict a launch by the end of 2028 -- the PS5 has been on the market since 2020 -- with Mizuho forecasting that Sony will release a handheld console followed by a home console a year later.

In Sony's other divisions, exchange rates are also expected to bolster results in music, film, and image sensors, particularly those used in smartphones.

Between April and June, net profit surged 32.1 percent to 342.2 billion yen and sales rise by 8.2 percent.

The group stated that the powerful earthquake that struck Kumamoto in southwestern Japan on Tuesday, leaving 35 people dead, had affected its local semiconductor production plants, though without causing major damage.

L.Mason--AMWN