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Will Sony's Robust PS4 Sales Combat Kumamoto Aftermath?
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On Aug 29, we issued an updated research report on Sony Corporation .
Headquartered in Tokyo, Japan, Sony Corp. designs, manufactures and sales several consumer and industrial electronic equipments. Sony’s Game & Network Services business – which accounts for the company’s service-related revenues – has lately proven to be one of the strongest growth drivers. As per the company’s mid-term business plan, console sales, subscriber addition to PlayStation network and virtual reality headset prospects are likely to boost growth.
In order to capitalize on the PS4 prospects, Sony has launched a series of products that have already attracted a lot of attention. During first-quarter 2016, Sony’s gaming division – Sony Interactive Entertainment America LLC (“SIEA”) – unveiled an attractive line up for PS4 including Days Gone, Spider-Man, LEGO Star Wars: The Force Awakens, God of War, Death Stranding, Final Fantasy XV, Resident Evil 7 biohazard at the Electronic Entertainment Expo (“E3”) video game conference.
Sony has been diligently making changes in its internal administration to attain a leaner organizational structure, in order to augment growth. Some of the major internal organizational shakeup includes transfer of storage media business and semiconductor-related business to subsidiaries Sony Storage Media and Devices Corporation (“SSMD”) and Sony Semiconductor Solutions Corporation (“SSS”), respectively. Also, Sony placed the network platform development and operation business under Sony Computer Entertainment Inc.’s (“SCEI”) and transferred its battery business to Murata Manufacturing Co.
This apart, the company’s accretive acquisitions and joint ventures also look promising. For instance, during first-quarter 2016, Sony invested in U.S. technology start-up – Cogitai – to strengthen its foothold in the artificial intelligence domain. Back in the 90s and early 2000s, the company was a frontrunner in this domain, having launched innovative products like robotic dog AIBO and humanoid robot QRIO. The company also completed the acquisition of Belgium-based company, eSATURNUS NV, to bolster its presence in digital healthcare. This buyout is in line with Sony’s medium-term growth strategies which have medical business as one of the key growth drivers.
Despite these positives, the Kumamoto earthquakes devastation is expected to be a major growth dampener, putting a pressure on Sony’s financials for quite some time to come. For first-quarter 2016, effect of Kumamoto earthquakes on the operating income was estimated to be around $34.2 billion yen, including opportunity losses. The company expects full-year operating income to be affected by 80 billion Yen. Though the Kumamoto factory production is progressing ahead of schedule, Sony expects to bear material losses.
Moreover, Sony has a sturdy international presence, with majority of its revenues coming from emerging markets. During first-quarter fiscal 2016, the company’s Game & Network Services, Home Entertainment & Sound, Semiconductors and Components were hurt by foreign currency fluctuations. Going forward, the company believes foreign exchange rate will be 103 Yen to U.S. dollars and 114 Yen to the Euro. This is expected to affect its consolidated sales strongly.
This apart, the majority of Sony’s business including Mobile Communications and Components are being hurt by the prolonged weakness in smartphone sales and battery business. . Also, intense competition in in each of its product lines including television, game platform and smartphone and services across the world, are anticipated to pose as headwinds.
Sony currently holds Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include Adidas AG (ADDYY - Free Report) , Central Garden & Pet Company (CENT - Free Report) and SodaStream International Ltd. . All three stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Will Sony's Robust PS4 Sales Combat Kumamoto Aftermath?
On Aug 29, we issued an updated research report on Sony Corporation .
Headquartered in Tokyo, Japan, Sony Corp. designs, manufactures and sales several consumer and industrial electronic equipments. Sony’s Game & Network Services business – which accounts for the company’s service-related revenues – has lately proven to be one of the strongest growth drivers. As per the company’s mid-term business plan, console sales, subscriber addition to PlayStation network and virtual reality headset prospects are likely to boost growth.
In order to capitalize on the PS4 prospects, Sony has launched a series of products that have already attracted a lot of attention. During first-quarter 2016, Sony’s gaming division – Sony Interactive Entertainment America LLC (“SIEA”) – unveiled an attractive line up for PS4 including Days Gone, Spider-Man, LEGO Star Wars: The Force Awakens, God of War, Death Stranding, Final Fantasy XV, Resident Evil 7 biohazard at the Electronic Entertainment Expo (“E3”) video game conference.
Sony has been diligently making changes in its internal administration to attain a leaner organizational structure, in order to augment growth. Some of the major internal organizational shakeup includes transfer of storage media business and semiconductor-related business to subsidiaries Sony Storage Media and Devices Corporation (“SSMD”) and Sony Semiconductor Solutions Corporation (“SSS”), respectively. Also, Sony placed the network platform development and operation business under Sony Computer Entertainment Inc.’s (“SCEI”) and transferred its battery business to Murata Manufacturing Co.
This apart, the company’s accretive acquisitions and joint ventures also look promising. For instance, during first-quarter 2016, Sony invested in U.S. technology start-up – Cogitai – to strengthen its foothold in the artificial intelligence domain. Back in the 90s and early 2000s, the company was a frontrunner in this domain, having launched innovative products like robotic dog AIBO and humanoid robot QRIO. The company also completed the acquisition of Belgium-based company, eSATURNUS NV, to bolster its presence in digital healthcare. This buyout is in line with Sony’s medium-term growth strategies which have medical business as one of the key growth drivers.
Despite these positives, the Kumamoto earthquakes devastation is expected to be a major growth dampener, putting a pressure on Sony’s financials for quite some time to come. For first-quarter 2016, effect of Kumamoto earthquakes on the operating income was estimated to be around $34.2 billion yen, including opportunity losses. The company expects full-year operating income to be affected by 80 billion Yen. Though the Kumamoto factory production is progressing ahead of schedule, Sony expects to bear material losses.
Moreover, Sony has a sturdy international presence, with majority of its revenues coming from emerging markets. During first-quarter fiscal 2016, the company’s Game & Network Services, Home Entertainment & Sound, Semiconductors and Components were hurt by foreign currency fluctuations. Going forward, the company believes foreign exchange rate will be 103 Yen to U.S. dollars and 114 Yen to the Euro. This is expected to affect its consolidated sales strongly.
This apart, the majority of Sony’s business including Mobile Communications and Components are being hurt by the prolonged weakness in smartphone sales and battery business. . Also, intense competition in in each of its product lines including television, game platform and smartphone and services across the world, are anticipated to pose as headwinds.
Sony currently holds Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include Adidas AG (ADDYY - Free Report) , Central Garden & Pet Company (CENT - Free Report) and SodaStream International Ltd. . All three stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>