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Sony Tops Profit Estimates as Chips, Music Lead Growth

  • Company increases revenue forecast, keeps profit outlook
  • Games profit dips from prior year, when Uncharted 4 released

Sony Corp.’s turnaround is right on track.

The Japanese electronics and entertainment company posted quarterly profit that topped analyst estimates, thanks to demand for smartphone camera chips, a healthy music business and brisk sales of PlayStation 4 consoles and games. Operating profit was 157.6 billion yen ($1.4 billion) in the fiscal first quarter that ended in June, beating analysts’ average projection for 133.3 billion yen. Sales rose 15 percent to 1.86 trillion yen, topping predictions.

After a tumultuous year that included an earthquake that crippled camera-chip production and a $1 billion writedown in films, the latest quarter is a return to stability for Chief Executive Officer Kazuo Hirai. The increasing number of PlayStation 4 owners is driving sales of software and online services, while smartphone makers adopt more camera chips per device and more people pay to stream music. Still, Sony appears to be playing it safe, keeping its full-year profit guidance of 500 billion yen, even though it lifted its sales forecast by 3.8 percent to 8.3 trillion yen.

“Results are good,” said David Dai, an analyst at Sanford C. Bernstein & Co. “But they’re still low-balling their profit outlook, so I would expect to see them continue to beat consensus as well as their own guidance going forward.”

Chief Financial Officer Kenichiro Yoshida defended the conservative outlook, saying “for one thing, we only had three months in this...