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SONY Plans to Tap Mobile Gaming Market With Savage Game Buyout

·4 min read

Sony Group Corporation SONY recently inked an agreement to acquire Savage Game Studios for an undisclosed amount to further bolster its mobile gaming efforts.

Savage Game Studios is a Helsinki and Berlin-based company focusing on mobile gaming development.

Sony Corporation Price and Consensus

Sony Corporation Price and Consensus
Sony Corporation Price and Consensus

Sony Corporation price-consensus-chart | Sony Corporation Quote

Sony’s push into the mobile gaming space is understandable as the mobile gaming market is set to witness CAGR of 12.5% between 2022 and 2027, per a Mordor Intelligence report.

Mobile games have become popular as these games do not require the purchase of expensive hardware. Increasing penetration of smartphones is an added advantage.

Post the acquisition, Savage Studios will join the newly created PlayStation Studios Mobile division. This division is involved in the development of high-quality, unique mobile games that adhere to PlayStation Studios' high standards while offering customers new gaming experiences.

Savage Game has commenced work on an unannounced AAA mobile live service action game.

Sony is a well-known player in the video game space, with its PlayStation being one of the most sought-after gaming consoles in the world.

Recently, the company announced that it is raising the price of its PS5 console in select markets across Europe, Middle East and Africa (EMEA), Asia-Pacific (APAC), Latin America (LATAM) and Canada.

The increase in price was due to a steep rise in inflation and depreciation of the yen against the dollar. Further rising global costs and semiconductor shortages have hampered production.

In June, Sony launched a new gaming gear brand - INZONE - specially designed for hardcore PC and PlayStation gamers. Prior to that, it made an investment of approximately $1 billion in Epic Games through its wholly-owned subsidiary, Sony Corporation of America, to expand its foothold in the gaming space.

The company reported first-quarter fiscal 2022 net income per share (on a GAAP basis) of ¥175.21 per share, increasing from ¥169.22 reported in the year-ago quarter.

Quarterly total revenues inched up 2.4% year over year to ¥2,311.5 billion ($17842.4 million). However, due to weak macroeconomic conditions, the company trimmed its operating income guidance. Operating income is now projected to be ¥1,110 billion, suggesting a decline of 8% year over year. Earlier, operating income was projected to be ¥1,160 billion.

It currently has a Zacks Rank #3 (Hold). The stock has lost 21.4% in the past year compared with the industry’s fall of 24%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Stocks to Consider

Some better-ranked stocks from the broader technology space are Cadence Design Systems CDNS, Badger Meter BMI and Arista Networks ANET. Cadence Design Systems and Arista Networks each sport a Zacks Rank #1 (Strong Buy), whereas Badger Meter carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CDNS 2022 earnings is pegged at $4.11 per share, rising 5.7% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.7%.

Cadence’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 9.8%. Shares of CDNS have jumped 6.7% in the past year.

The Zacks Consensus Estimate for BMI’s 2022 earnings is pegged at $2.30 per share, up 6% in the past 60 days.

Badger Meter’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters, with the average being 12.6%. Shares of BMI have lost 9.6% of their value in the past year.

The Zacks Consensus Estimate for Arista Network’s 2022 earnings is pegged at $4.04 per share, increasing 9.8% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.6%.

Arista Network’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.1%. Shares of ANET have increased 30.7% in the past year.


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