Sony upgrades guidance but warns virus could disrupt supply chain

Sony smartphone
Sony Corporation raised is annual profit outlook due to strong sales of smartphone image sensors but also warned that the growing coronavirus could adversely affects its global supply chain. (Pixabay)

Sony Corporation delivered mixed news Tuesday, raising its annual profit outlook due to strong sales of smartphone image sensors but also warning that the growing coronavirus could adversely affects its global supply chain, according to a Reuters report.

Chief Financial Officer Hiroki Totoki was quoted as saying in a Tuesday earnings briefing that image sensor demand remains strong and inventory remain levels remain low, with plants operating at full capacity. But the coronavirus could cause Sony to suspend sensor production in its China-based assembly plants, disrupting shipments and potentially leading to shortages, according to the Reuters report.

Totoki also was quoted as saying the virus could disrupt the production and shipment of its PlayStation gaming hardware and other consumer electronics.

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"We can't deny the possibility of the virus threat expanding to a scale large enough to wipe out our latest upward earnings revision," Totoki said in the report.

Sony raised its annual operating profit forecast by 5% to 880 billion yen ($8.1 billion), roughly in line with the 878.47 billion yen consensus of 22 analysts compiled by Refinitiv, Reuters said in the report.

For the December 2019 quarter, Sony’s profit dropped 20% to 300.1 billion yen, still beating the 271.07 billion yen average analyst estimate, according to Reuters.

But the report noted that Sony's sensor business continued to thrive as smartphone makers compete to adopt larger image sensors and multiple lenses on embedded cameras for improved picture quality, driving quarterly profit at the business by 62% to 75.2 billion yen.

According to the report, Sony accounts for roughly half of the global image sensor business, supplying most global smartphone makers including Apple Inc. and Huawei Technologies Co. Ltd.

On a negative note, Sony's gaming business saw its December quarter profit fall 27% to 53.5 billion yen as sales of its six-year-old PlayStation 4 console continued to decline, according to the report.

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