(Bloomberg) — Sony Group Corp. said it would buy back as much as 200 billion yen ($1.5 billion) of its own shares after reporting earnings that missed analyst estimates.
The entertainment group reported operating profit of 138.6 billion yen in the fourth fiscal quarter, falling short of consensus analyst estimates of 148.5 billion yen. The company forecast operating income of 1.16 trillion for the current fiscal year, also shy of estimates of 1.2 trillion yen.
Sony said it would repurchase as many as 25 million shares over the next year, 2.02% of the total outstanding. It also announced a 200 billion yen buyback program a year earlier as it reported results. The company’s shares have dropped 27% so far this year, roughly in line with the tech-heavy Nasdaq index.
Sony’s flagship PlayStation 5 game console has suffered supply constraints from component shortages and logistics disruptions. The company has said unfilled demand is strong enough to eventually bring the PS5 back on track to be its fastest-selling console generation, but data from outside firms such as U.S.-based NPD Group Inc. show Microsoft Corp.’s Xbox hardware began to outpace PlayStation in recent months.
Sony will roll out new online services for PlayStation users in June, including an option similar to Xbox’s Game Pass subscription offering.
“We expect Sony to accelerate the PlayStation 5’s production volume in this fiscal year to recapture the ground, though at the cost of pressure on profit margins,” said Macquarie Capital Securities analyst Damian Thong said.
Sony benefited from its movie business in the fiscal year that just ended, thanks largely to the success of the hit “Spider-Man: No Way Home.” Sales for the division surged more than 50% to 1.24 trillion yen, while operating income more than doubled to 217.4 billion yen.
While the Japanese currency has plummeted in recent weeks, the weak yen is unlikely to give a substantial lift to Sony’s bottom line — even if the currency slips further against the dollar and euro — according to Bloomberg Intelligence analyst Masahiro Wakasugi. The company’s PlayStation and smartphone hardware units have significant costs in foreign currency, offsetting the upside for its image-sensor division, Wakasugi said.
Read more: Yen Freefall Has Fewer Benefits for Japan Inc. as Economy Shifts
(Updates with details of buyback program from third paragraph)
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