Console strategy and stock buyback lift Sony shares despite weak financial year forecast
Sony Group shares jumped more than 3.5 percent on Wednesday in volatile US trading after the company announced a share buyback and reported better-than-expected operating income.
According to CNBC, the Japanese electronics, entertainment and finance conglomerate said it would repurchase up to US$1.7bn of its own shares.
For the final quarter of its financial year, Sony posted operating income of ¥203.6bn.
This figure topped the ¥192.2bn estimate from LSEG analysts, although it marked an 11 percent decline compared with the same period last year.
In the same earnings report, Sony disclosed a partial spinoff of its financial unit.
The company said it plans to distribute slightly more than 80 percent of the spinoff's common stock to existing shareholders as dividends.
It expects to list the financial unit later this year and confirmed it would classify it as a discontinued operation in its accounting starting from the current quarter.
Despite the earnings beat and capital return, Sony issued a muted forecast for the current financial year ending March 2026.
The company projected a 0.3 percent increase in operating profit to ¥1.28tn. This forecast fell short of the average analyst expectation of ¥1.5tn.
Sony attributed part of the subdued forecast to an anticipated ¥100bn hit stemming from tariffs imposed during the US trade war under US President Donald Trump.
It clarified that the estimate did not take into account the US–China trade deal announced on Monday and warned the final impact could “vary significantly.”
The US agreed to temporarily lower tariffs on Chinese goods to 30 percent from 145 percent.
In response, China committed to reducing tariffs on US goods to 10 percent from 125 percent.
During the company’s earnings call, a Sony executive said the company would respond to tariffs by “stockpiling strategic inventory in the US, adjusting product shipment allocation on a global basis, and raising prices on certain products with an eye on market trends and other means.”
Sony had already raised prices on its PlayStation 5 console in April across Europe, Australia and New Zealand.
The company cited a “challenging economic environment,” pointing to inflation and volatile exchange rates.
Sony President and CEO Hiroki Totoki said during the call that its entertainment business made up about 61 percent of consolidated sales during the quarter.
He said the company will continue to expand that segment and focus on increasing active users and per-user spending on the PlayStation 5 to support profit growth.
While Sony released its earnings, US stock futures fell slightly.
S&P 500 futures were down 0.2 percent, Nasdaq-100 futures dropped 0.1 percent, and Dow Jones Industrial Average futures declined 154 points, or nearly 0.4 percent.
The pullback followed three days of gains as markets responded to a temporary easing in the US–China tariff dispute.
Over the weekend, US Treasury Secretary Scott Bessent met with Chinese officials to negotiate the tariff reductions, helping calm inflation concerns and expectations of slowing economic activity.
That momentum mostly carried into Wednesday, with the S&P 500 up 0.1 percent and the Nasdaq Composite gaining 0.7 percent. The Dow dipped 0.2 percent.
Major tech stocks extended their rally for the week. Nvidia and Tesla rose more than 16 percent, Meta Platforms climbed 11.3 percent, and Amazon and Alphabet each advanced over 8 percent.
The Nasdaq Composite increased 6.8 percent week-to-date, while the S&P 500 added 4.11 percent and the Dow rose 1.9 percent.
Investor sentiment strengthened Tuesday after April’s US consumer inflation came in lower than expected. Prices excluding food and energy rose 0.2 percent, below economists’ 0.3 percent estimate.
Markets now await key US economic indicators on Thursday.
