Sony Corp. (SNE - Analyst Report) reported second-quarter fiscal 2015 GAAP earnings per share of ¥26.10 (22 cents), compared with GAAP loss per share of ¥124.32 in the prior-year quarter.
Sony Corporation Adrs (SNE - Analyst Report) Recent Quarterly Reported EPS | FindTheCompany
Robust results were primarily attributable to improved operational performance across the major segments. Especially, high gain from sales of image sensors units remains the winner.
Inside the Headlines
For the quarter, Sony’s sales and operating revenue dipped 0.5% year over year to ¥1,892.7 billion ($15,773 million). On the other hand, net sales rose 3.6% year over year to ¥1,663.6 billion ($13,864 million).
While decrease in Mobile Communications and Financial Services segments revenues were the headwinds, rise in sales from Game & Network Services segment and positive foreign currency impact acted as the tailwinds.
Additionally, operating income improved to ¥88.0 billion ($733 million) from operating loss of ¥85.6 billion.
During the quarter, Sony penned a deal with JP Morgan Securities Japan Co., Ltd. – a subsidiary of JPMorgan Chase & Co. (JPM - Analyst Report) – to sell about 17.2 million shares of Olympus Corporation.
Also, Sony unveiled a new line of high-resolution audio and mobile devices. This includes a new range of headphones called “h.ear’ and Hi-Res audio products; the NW-ZX100HN Walkman; new line of Xperia Smartphones and headsets; upgraded Cyber-shot camera range; and a brand new elegant range of 4K BRAVIA TVs.
Segmental Revenues
Sales and operating revenue of the Game & Network Services segment increased 16.5% year over year to ¥360.7 billion ($3,006 million) mainly aided by robust sales of PlayStation 4 software and its peripheral device units along with favorable foreign exchange rates impact. However, drop in PS3 software sales was the headwind.
Additionally, Devices’ sales and operating revenue increased 7.4% year over year to ¥258.1 billion ($2,151 million) benefiting from strong sales of image sensors as well as foreign currency gains. On the other hand, decrease in battery business partially offset the growth.
Moreover, the Imaging Products & Solutions segment exhibited a 4.1% year-over-year increase in sales and operating revenue to ¥186.0 billion ($1,550 billion), driven by exchange rates gains as well as product mix enhancement of digital cameras. However, dip in the digital cameras unit sales was the headwind.
Also, Music segment experienced a 15.0% rise in sales and operating revenues to ¥138.7 billion ($1,156 million) on a year-over-year basis. This was due to increase in Visual Media and Platform sales along with depreciation of the yen against the U.S. dollar.
Alongside, Pictures Segment’s sales and operating revenue rose 0.9% year over year to ¥183.7 billion ($1,531 million). Low sales of Motion Pictures and television licensing revenues curbed the growth rate.
However, Mobile Communications’ sales and operating revenue tumbled 15.2% year on year to ¥279.2 billion ($2,327 million) due to the strategic trim down of smartphone unit sales to boost profitability. Also, Home Entertainment & Sound segment witnessed a 0.2% year-on-year decline in sales and operating revenues to ¥289.1 billion ($2,409 million). Sharp decrease in home audio and video unit sales was the headwind, which was partially offset by enhancement in LCD televisions’ product mix.
Also, Financial services revenue plummeted 21.8% year on year to ¥210.7 billion ($1,756 million) owing to weak performance of Sony Life.
Liquidity & Cash Flow
As of Sep 30, 2015, Sony’s cash and cash equivalents stood at ¥1.0 billion ($8,418 million), against ¥949.4 million as of Mar 31, 2015. Conversely, long-term debt was ¥766.7 million ($6,389 million), versus ¥712.1 million as of Mar 31, 2015.
Fiscal 2016 Guidance
Sony has reaffirmed its outlook for fiscal 2016. The company continues to project net income to be ¥140 billion, sales and operating revenue to be ¥7,900 billion and operating income to be ¥320 billion. The company assumes the average foreign exchange currency rates for the remainder of the fiscal year to be about ¥125 against one U.S. dollar.
Subsequent to Quarter-end developments
In October, Sony disclosed the buyout of Softkinetic Systems S.A. for an undisclosed amount. Brussels, Belgium-based, Softkinetic deals in making 3D sensing computer vision technologies, which include time-of-flight (‘ToF’) range image sensor and gesture-tracking middleware. Also, the company stated that it is amid negotiation to buy CMOS image sensor business of Toshiba Corp.
Apart from this, Sony stated its plan to implement a new operation structure to streamline its Devices segment. The main motive is to boost the competence of the three main businesses – semiconductor, battery and storage media – under the segment and enhance their adaptation to the respective dynamic market environment.
In Conclusion
Going forward, we believe the quarter-end acquisitions will further intensify the performance of its strong image sensors business. Also, other deals penned in second-quarter fiscal 2015, like establishment of the logistics joint venture with MITSUI-SOKO HOLDINGS Co., Ltd will further benefit the company’s financials. Sony projects to reap operating income of about ¥13 billion in the quarter ending Mar 31, 2016 from this. Moreover, the abovementioned product launches will contribute towards capturing the dynamic consumer lifestyle market and bode well for long-term growth.
Sony currently boasts a Zacks Rank #1 (Strong Buy). Other well-ranked stocks in the same sector include Jabil Circuit Inc. (JBL - Analyst Report) and Flextronics International Ltd. (FLEX - Snapshot Report). While Jabil Circuit carries the same rank as Sony, Flextronics holds a Zacks Rank #2 (Buy).
Note: 120 YEN = 1 U.S. Dollar (Approximate Tokyo Foreign exchange market rate as of Sep 30, 2015)
Comments
Log in or sign up to join the conversation.