Shares in Japan’s Sony plummeted by 6% in Tokyo trade as its first-quarter profit experienced a sharp decline. The entertainment conglomerate attributed lackluster performances from its movie and financial divisions as the main cause for this decline.

Operating profit took a significant hit, sliding by 31%. Concerns were further raised as Sony executives commented on the demand for its games and image sensors units.

The launch of the PlayStation 5 console in late 2020 was marred by supply chain issues during the COVID-19 pandemic, resulting in a limited supply. Although these issues have been alleviated, Sony reported that sales in the April-June quarter fell below expectations. The company aims to sell 25 million units by the end of the year.

In the quarter, Sony managed to sell 3.3 million PS5 units. By comparison, Nintendo’s Switch console, which has been on the market for seven years, sold 3.9 million units during the same period, thanks to the popularity of the latest “Zelda” title.

Sony stated that its sales momentum for the PS5 has seen improvement due to promotional efforts initiated in July. However, industry experts expressed concerns over the company’s decision to discount the PS5 in the West, perceiving it as an unfavorable sign.

“The company has a lot of work to do, primarily ensuring the timely release of highly anticipated first-party games,” said Serkan Toto, the founder of the Kantan Games consultancy.

“Marvel’s Spider-Man 2” is scheduled for release in October, just in time for the crucial year-end shopping season. Its predecessor has already sold over 13 million units.

Moreover, as a leading manufacturer of image sensors used in cameras, Sony has revised its expectations for a gradual recovery in the smartphone market. The company now predicts that such a recovery will not occur until at least 2024 due to weak demand in major markets. Consequently, Sony reduced its annual operating profit forecast for the unit by 10%, citing the impact of lower sales.

Sony attributes the significant impact in the second quarter to adjustments made in procurement by smartphone manufacturers.

Jefferies analyst Atul Goyal wrote in a client note that the current financial year “will be tough” for the sensors division, but he anticipates higher margins in the following year.

© Thomson Reuters 2023

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)