Sony Set for Higher-Than-Expected Profits

Sony returns in the fourth quarter with higher-than-expected annual profits. Forecasts put that amount at an additional $800 million in operating profit. This has been a common theme for Japanese electronic producers, as increased demand from neighboring countries has helped spur sales. There has been an interesting ebb and flow recovery occurring within certain industries, while others struggle to break the shackles. Although Sony has seen a rise in expected profits throughout the year, there are hurdles yet to come. A standstill in U.S. production and sanctions may yet affect the financials once annual reports are released.

Prior concerns for Sony

The positive forecast for Sony’s financial outlook has come at a time when external forces might have brought on a financial slump – instead Sony continues to recover amid global economic turmoil. When the U.S. sanctioned Huawei – citing security concerns – many were left scratching their heads. In particular, Sony would have to stop selling their camera parts to the smartphone producer. This outright ban left Sony wondering how they’d recoup profits by way of alternative revenue streams. 18 months later and Sony seems to have taken it in the company’s stride and has shed prior concerns, to post profits exceeding expectations.

However, this will still account for a decrease in overall sales once the fiscal year ends. Sony is expecting a drop of 10% in sales of their image-sensing semiconductor devices. The issue surrounding the sanction doesn’t prohibit Sony selling to their customers. However, any device which is made using American technology is banned from being sold to the Chinese smartphone maker.

What makes Sony’s recovery even more incredible is the fact that their American-based movie operations are also at a standstill. The inability to finish production on a variety of films and unable to release finished products have stymied revenue streams coming out of the U.S. This is set to continue for the foreseeable future as the industry waits in limbo.

Looking to the future

Regardless of sanctions and Sony’s delayed movie business, the company   has reason to smile. The release of the eagerly-anticipated PlayStation 5 is around the corner. In the coming month, Sony will finally have replaced the PlayStation 4 and expect to sell more units this time round. With many having reverted back to home entertainment, this is certainly possible.

Sony’s music division contributed to the latest Japanese film, an animation which continues to smash box-office records. The contribution of the entertainment and gaming portfolios is what has helped Sony on the back of unforeseen external difficulties.

It will be interesting to see what the next couple of months hold for the Japanese multi-conglomerate. The tide seems to be turning in favor of the electronics maker and one can only speculate. If Sony is able to overcome the ensuing months, then 2021 may be their year.

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