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(Bloomberg) -- Sony Group Corp.’s stock climbed as much as 11% in Tokyo on Friday, the most since August, after the entertainment group raised its profit and revenue outlook on growing momentum for its entertainment businesses.
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A surprise burst in demand for the PlayStation 5 over the holiday quarter helped the company to beat expectations of an operating profit drop and prompted a lift of its forecasts. Sony now expects ¥1.08 trillion ($7 billion) in net income in the year to March, 10% higher than previously, the Tokyo-based company said on Thursday.
A yearslong spending spree on content is now paying off for Sony, whose flagship console is in its fifth year on the market and being sustained by the popularity of an expanding portfolio of games. Sony sold 9.5 million units of the PlayStation 5 in its fiscal third quarter and reported a record number of PlayStation online subscribers for any console generation, now at 129 million.
“The PS5 has now beefed up its library of games and broadened its user base,” Morningstar Research Director Kazunori Ito said. “This should guarantee profit generation in the next fiscal year and the year after that.”
Sony’s earnings are also getting a boost from its music segment, with streaming services lifting revenue from both recorded music and music publishing. The company’s music operations, which also house smartphone games and anime publishing, were further helped by the continued popularity of such offerings outside Japan.
Along with its earnings, the tech conglomerate, whose shares had been flat from the start of the year, announced a facility to buy back as many as 30 million shares, or 0.5% of its outstanding stock, worth as much as ¥50 billion through May 14.
In January, Sony announced the promotion of Chief Financial Officer Hiroki Totoki to the chief executive post from April, tasking him with expanding the company’s entertainment portfolio.
Totoki, 60, has overseen Sony’s expansion into ventures beyond the console, such as PC gaming accessories. In 2024, the company was active in pursuing mergers and takeover deals to grow its entertainment lineup. It was one of the bidders for Paramount Global, expressed interest in acquiring Japanese content house Kadokawa Corp. and eventually mothballed a merger with India’s Zee Entertainment after disagreements over leadership.