The Japanese electronics and entertainment conglomerate, Sony Corporation (NYSE: SNE) reported fourth-quarter earnings on Wednesday. Group revenues were down 5% at $75.7 billion resulting in a 36% drop in profits that amounted to $5.34 billion for the 2019-2020 financial year that ended in March.
Sony is facing many competitors in all of its segments from the likes of Samsung Electronics Co. Ltd (FRA:SSUN), LG Display (NYSE: LPL), Apple, Inc. (NASDAQ: AAPL), Panasonic Corporation (OTC: PCRFY), Philips, Huawei Technologies, HP Inc. (NYSE: HPQ), Microsoft Corporation (NASDAQ: MSFT) and AsusTek Computer Inc (TW:2357). And, like its peers, COVID-19 blues are evident across most major metrics of the company's income statement on a year-over-year basis, although the company's music and pictures division did show some positive signs of resilience.
To its credit, Sony had prudently managed its financial resources prior to the current global pandemic. The company had close to $9 billion in cash on its balance sheet at the year-end, with unused $14.7 billion of credit and commercial paper programs, leaving the company in a strong position despite not being able to deliver the strong year it had hoped.
The slowing revenue figures at a group level were contrasted to two segments. Revenues at the pictures division jumped from $8.87 billion to $9.32 billion while profits from film and TV content jumped from $489 million in the previous financial year to $628 million.
The Music segment also enjoyed a 5% revenue increase over the year as it ended up with $7.87 billion due to music publishing. This is primarily a result of the consolidation of EMI, but also from an increase in streaming revenues. Still, operating income suffered for dropping $2.15 billion to $1.31 billion as the bottom line took a hit from accounting changes relating to past acquisitions.
Despite having significant decreases in both revenue and operating income, both top and bottom lines in Sony's games and network segments suffered, with sales down 14% and operating income 23%. PlayStationsPlus did lure in more subscribers in the period, with 41.5 million subscribers at the end of March compared to 36.4 million in 2019 and 34.2 million in 2018.
As for forecasts, music is anticipated to be the best-performing segment on an operating income basis during this year, though gaming is expected to experience the least amount of volatility in the current fiscal year.
A Grim Outlook
All-in-all, Sony's earnings results mirror the grim financial reality that has been shaped by the coronavirus. In what would otherwise likely have been a great year for the company due to the PlayStation 5 launch and the upcoming release of highly-anticipated gaming titles, Sony now faces a year when executives are forced to speculate the extent of the losses that might result from the pandemic.
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