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(Bloomberg) — Sony Corp. rose the most in almost three weeks in Tokyo after raising its profit forecast a second time as Chief Executive Officer Kazuo Hirai’s revamp stokes earnings from games and financial services. The shares rose as much as 3.4 percent to 3,800 yen as of 9:04 a.m. in Tokyo, the biggest gain since April 3. Operating income more than doubled to 68 billion yen ($569 million) in the year ended March, the company reported Wednesday. That compares with the 47.2 billion-yen average of analyst estimates compiled by Bloomberg.

Hirai’s emphasis on profitability instead of volume growth has combined with Chief Financial Officer Kenichiro Yoshida’s focus on accountability to restore investor confidence in the company. Sony expects earnings in the 2018 fiscal year to reach a two-decade high on growth from game consoles, entertainment and sensors for smartphone cameras.

“It’s a positive surprise in terms of the magnitude of the revision,” said Atul Goyal, a Singapore-based analyst with Jefferies Group LLC. “It’s also evidence of how Yoshida guides. He’s very conscious of never having to revise down.”Wednesday’s earnings were on a preliminary basis and the Tokyo-based company reports final results and the forecast for the current fiscal year on April 30.

“When he gives the outlook for the current year next week, you need to be cognizant of his extremely conservative approach,” Goyal said of Yoshida. Sony cut its outlook 15 times in the past seven years.

PlayStation Sales

The Tokyo-traded stock has has soared 53 percent this year, compared with a 16 percent gain for the benchmark Topix index.
Sales climbed 5.7 percent to 8.2 trillion yen, beating the company’s February outlook. The net loss, which includes a writedown of its smartphone unit, narrowed to 126 billion yen, compared with the 170 billion yen estimated earlier.

Sony sold its personal-computer business, pruned its smartphone lineup and placed the TV manufacturing business into a separate structure to boost performance. It also started selling the PlayStation 4 console in China.
The company is moving its mobile-phone operations out of its Tokyo headquarters to save on rent, according to a memo obtained by Bloomberg.

Better-than-expected sales of imaging products and the PS4 contributed to Wednesday’s forecast revision, George Boyd, a Sony spokesman, said by phone. The company didn’t disclose earnings for all its units.

Financial Services

In February, Sony forecast full-year operating profit of 20 billion yen after an earlier projection for a 40 billion-yen loss.
“We retain the name high in our recommended core holdings,” said Amir Anvarzadeh, a manager of Japanese equity sales at BGC Partners Inc. in Singapore. “It is this term’s forecasts which the market will be looking at now.”

Earnings from financial services were helped by smaller provisions as the life-insurance business was buoyed by a stock market rally, the company said. Japan’s Topix index has risen 40 percent in the 12 months.

The financial-services unit had operating income of 170 billion yen in the previous fiscal year, more than any other Sony division.

Hirai in February forecast Sony’s operating profit will climb to 500 billion yen in the year ending March 2018. That’s the highest since 1998, when income was fueled by MiniDisc players and the first “Men in Black” movie.

To contact the reporters on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net; Grace Huang in Tokyo at xhuang66@bloomberg.net To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net Robert Fenner, Dave McCombs