SONY CORP. cut its full-year revenue outlook, citing slower-than-anticipated sales of its PlayStation 4 games console, televisions and Xperia smartphones.

The electronics maker’s 8.6 trillion yen ($79 billion) sales target for the year ending March 2020 is 200 billion yen short of the prior forecast from April, the Tokyo-based company said in a statement Tuesday. The profit outlook was left unchanged.

Sony is predicting annual operating profit to drop for the first time in three years as it steps up investments in games and semiconductors. Chief Executive Officer Kenichiro Yoshida, who played a key role as chief financial officer in the company’s turnaround over the past half-decade, is looking for ways to spark growth. Sony is developing a successor to the PlayStation 4 and has partnered with Microsoft Corp. on cloud gaming. The CEO is also boosting capital spending to 1.2 trillion yen through March 2021, driven by investments in smartphone camera sensors.

“It’s difficult to get excited about Sony this year, because there is no growth story to be told,” Jefferies Group senior analyst Atul Goyal said ahead of the earnings release. “PlayStation 5 is looking good next year, but we don’t have anything on hand right now.”

Sony’s shares have climbed 10% this year. They closed at 5,859 yen before the earnings announcement on Tuesday, up 14% from the start of April last year, when Yoshida took helm.

In games, its most important unit, Sony trimmed its revenue outlook by 4.3% to 2.2 trillion yen after sales fell 3% in the first quarter. The PS4 sales target was cut by 1 million units to 15 million. The company kept the forecast for the segment’s operating profit to fall 10% to 280 billion yen because of rising costs in research and development related to the PS5.

The games division faces a big challenge in topping last year’s performance, when blockbusters such as God of War drove record earnings. This year’s lineup consists of lesser-known titles and the PS5 won’t go on sale this year, giving competitors a chance to win consumers over with new hardware.

In electronics products, a segment that includes smartphones and TVs, Sony cut its annual revenue outlook by 3.6% to 2.16 trillion yen. The TV target was cut by half a million to 10.5 million units. The company slashed its smartphone sales to 4 million units from 5 million, although it still expects the mobile business to narrow losses to 47 billion yen.

“Investors are keen to check the company’s progress toward that goal,” Kazunori Ito, an analyst at Morningstar Investment Services in Tokyo, said ahead of the earnings announcement.

Sony left its full-year profit outlook unchanged, forecasting a 9.4% drop to 810 billion yen. Analysts on average expect a profit of 821.5 billion yen. Operating income in the first quarter was 231 billion yen, more than the 176 billion yen average of analysts’ projections. Sales fell about 1% to 1.93 trillion yen, slightly less than analysts’ average prediction for 1.94 trillion yen.

Sony has again come under fire from activist investor Daniel Loeb. Loeb’s Third Point revealed a $1.5 billion stake in the company and advocated for a spin off of the chip business to finance a deeper expansion into entertainment, including games and movies. That’s the opposite of what he championed in 2013, when he called on executives to sell a part of their film division.

Yoshida has responded by saying that management is constantly studying how to increase long-term shareholder value. He has also carried out two record buybacks this year, pleasing investors and preempting calls for more drastic change.

“The buybacks have obviously had a positive impact,” Goyal said. “But another one isn’t likely.” — Bloomberg

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