Sony forecasts profit rise and $3.2bn buyback despite sharp drop in PS5 sales

Sony Group on Friday issued guidance for the fiscal year ending March 2027, forecasting operating profit of 1.6 trillion yen, an 11 percent increase, and a share buyback of up to 500 billion yen, or about $3.2 billion. The outlook arrives as the company's PlayStation 5 business absorbs a severe memory-cost shock. Sony sold just 1.5 million PS5 consoles in its fourth fiscal quarter, down 46 percent year over year, after raising the console's U.S. price twice to $649.99. For the current fiscal year, Sony expects hardware sales to fall about 6 percent and said production volumes will be sized to match the memory it can procure rather than to demand. Contract DRAM prices are expected to rise 90 to 95 percent quarter over quarter, driven by the same AI-led squeeze that has affected consumer-hardware vendors across the industry. The company offset the gaming weakness with stronger performance elsewhere. Music revenue grew by double digits, with Sony Music Publishing capturing royalty growth from streaming, live events, and merchandising. The image-sensor division continued to gain share in the high-end smartphone segment that Apple and top-tier Android brands compete in, with both volumes and average selling prices rising. Pictures revenue was weaker, with theatrical sales falling 12 percent in the December quarter. Sony also disclosed a $765 million impairment charge against Bungie, the studio behind Destiny 2 and Marathon, which it acquired for $3.6 billion in 2022. Bungie has been hit by repeated layoffs and was forced to delay Marathon after lackluster test feedback. The buyback program signals that management views the share price as an attractive use of treasury rather than a signal for transformative acquisitions. Sony has spent close to 2 trillion yen on share repurchases over the past decade.