Sony reports 29% drop in operating profit as weakness in chip business hits home

Sony on Thursday reported a 29% drop in operating profit in the fiscal second quarter as the Japanese electronics giant suffered from weakness in its imaging sensor — or chip — business.

Here’s how Sony did in the September quarter versus LSEG consensus estimates:

• Revenue: 2.8 trillion yen ($18.5 billion) versus 2.87 trillion yen expected. That represents an 8% increase year-over-year.
• Operating profit: 263 billion Japanese yen versus 304.4 billion yen expected. That marks a 29% drop year-over-year.

Sony attributed the significant drop in profit to weakness in its imaging sensor business, as well as declines in profit at its financial services and entertainment, technology and services businesses.

The company said profit in its chip division fell over 28% in the fiscal second quarter.

Sony supplies camera chips to consumer technology manufacturing giants like Apple, which uses its semiconductors in its iPhones.

The unit suffered from increased costs associated with depreciation and amortization expenses, mass production of a newly launched image sensor for mobile products, increased manufacturing costs, and decreased sales of image sensors for industrial and social infrastructure, Sony said.

Despite the slide in profit, the company increased its sales forecast for the full year, saying it now expects total sales of 12.4 trillion yen (up from earlier forecasts of 12.2 trillion yen) as it benefits from positive foreign exchange rates.

The Japanese yen has weakened significantly versus the dollar, and Sony makes most of its income outside of the U.S.

Sony also attributed improvement in its revenue forecast to anticipated bumper performance in its video game, music and imaging and sensing solutions businesses.

Sony is expecting its game and network services business, which is responsible for its popular PlayStation console, games studios and gaming…