Console companies Microsoft (MS), Nintendo and Sony will announce their first quarter earnings one by one starting on the 25th. Attention is paid to the somewhat contrasting outlook of each company.
MS will announce its performance for the third quarter of fiscal 2024 (January to March 2024) on the 25th (local time).
According to Zacks Investment Research, Microsoft’s sales forecast for the third quarter of fiscal 2024 is $60.63 billion (about KRW 83.52 trillion), an increase of 14.7% from the same period last year. Additionally, earnings per share (EPS) are expected to be approximately $2.81.
MS acquired Activision Blizzard in October last year and immediately noticed an increase in performance. Their sales during the second quarter of last fiscal year amounted to approximately $62.02 billion (approximately KRW 85.46 trillion), an increase of 18% compared to the same period last year. It posted an “earnings surprise” that exceeded market forecasts (consensus) among securities firms.
Notably, during the second quarter of the fiscal year, Microsoft’s gaming business showed a whopping 49% growth rate compared to the same period last year. Additionally, during the same period, sales of “Xbox” content and services increased by 61%, driving the company’s sales growth. The effects of the Activision Blizzard acquisition are expected to be felt this quarter and the gaming business is expected to see significant growth.
MS’s recent growth stands out not only in the gaming business but also in its “Azure” intelligent cloud service. According to securities firms, sales of Microsoft’s intelligent cloud division this quarter are estimated at about $26.01 billion, up 17.8% from the same period last year. The growth rate will remain stable and should support Microsoft’s performance going forward.
Nintendo will announce fourth quarter (January to March 2024) and annual earnings for fiscal 2024 on the 7th of next month.
Nintendo’s performance is worsening due to the delay in the release of the console’s successor ‘Nintendo Switch’. Nintendo Switch sales have been steadily declining every year since they peaked in fiscal 2021, and its competitiveness has weakened significantly. During the third quarter of the fiscal year, Nintendo reported revenue of 598.5 billion yen (about 5.3 trillion won), down 6.2 percent from the same period last year.
Nintendo hasn’t come up with any particular killer title that could boost the company’s sales in the fiscal fourth quarter. Sales are also expected to decline significantly compared to the previous year. However, as the yen continues to fall to record lows, net profit is expected to increase thanks to foreign exchange gains.
Furthermore, the positive outlook for the launch of new consoles and the acquisition of shares by Saudi Arabia’s sovereign wealth fund raise expectations, and stock prices are also expected to rise.
Sony will announce the fourth quarter (January to March 2024) and annual performance of fiscal 2023 on the 14th of next month.
Sony’s (G&NS) gaming business is showing steady growth thanks to the global success of its “PlayStation (PS) 5” console. In the third quarter of fiscal 2023, Sony’s G&NS division earned 1.4444 trillion yen (about 12.78 trillion won), an increase of about 16% compared to the same period last year. It accounted for the largest share of quarterly sales among Sony’s businesses. Cumulative sales during the entire fiscal year have already exceeded 3 trillion yen.
Aside from the positive trend, Sony notes that PS5 buzz has partially passed its peak. Additionally, games like ‘Final Fantasy VII Rebirth’ were introduced during the fourth quarter of the fiscal year, but sales of the titles were very disappointing. Due to low PS5 sales and disappointing content, sales of the G&NS division are expected to be stable.
[더게임스데일리 이상민 기자 dltkdals@tgdaily.co.kr]
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