In This Article:
(Bloomberg) -- Sony Group Corp.’s stock climbed its most in more than 18 months after it announced a share buyback and a stock split and net income beat estimates in the March quarter.
Most Read from Bloomberg
-
Iran State TV Says ‘No Sign of Life’ at Helicopter Crash Site
-
Speedier Wall Street Trades Are Putting Global Finance On Edge
-
Ebrahim Raisi, Iranian President Confronting West, Dies at 63
-
One of the Last Big Bears on Wall Street Turns Bullish on US Stocks
The Japanese company’s net sales for the quarter also beat expectations. That outweighed an annual revenue forecast that missed estimates and signs of waning demand for PlayStation 5 hardware. Cautious comments from Sony’s president about a joint bid with Apollo Global Management Inc. for Paramount Global also helped ease fears about a hasty deal.
Shares in Sony rose as much as 12% in Tokyo Wednesday morning, rebounding to levels prior to reports of its interest in Paramount.
Sony has been beefing up its content lineup in recent months. Arrowhead’s PlayStation 5 and PC shooter game Helldivers 2 far outperformed expectations, selling more than 12 million copies in its first 12 weeks on sale, Sony said. That makes it one of the PlayStation’s fastest selling games.
That helped operating income in its game and network segment surge a better-than-expected 170% to a record high in the March quarter. Net income came to ¥189 billion ($1.2 billion), above the average analyst estimate of ¥153.2 billion. Sales reached ¥3.5 trillion.
New leadership at Sony Interactive Entertainment means a large potential upside, wrote Jefferies analyst Atul Goyal in a note to investors. The company’s guidance is conservative, he said.
The stock got a further boost from the company’s plans to buy back up to 2.46% of its shares for as much as ¥250 billion. The company is also conducting a five-for-one stock split, effective Oct. 1. The stock split in particular will make it easier for retail investors to buy the stock, said Toyo Securities analyst Hideki Yasuda.
For the full year, the company said it expects sales revenue to be ¥12.3 trillion in the year through March 2025, narrowly missing analyst expectations.
Sony is predicting a ¥67.7 billion decline in the video game business, reflecting an aging hardware lineup. The company’s executives have said that the console, released in 2020, is now on the downslope of hardware sales, setting the stage for a potential updated edition for the holiday period this year.
Sony sold 4.5 million PS5 consoles in the March quarter. Active users on its PlayStation Network declined to 118 million in the period. PlayStation 5 exclusives, such as Square Enix Holdings Co.’s Final Fantasy VII Rebirth, have not performed well in recent times, pushing publishers like Square Enix away from locking their content down on a single platform.