What to Expect From Sony (NYSE: SNE) in 2012
by Jeannette Di Louie, Investment U Research
Tuesday, January 3, 2011
To say that Sony (NYSE: SNE) had a rough 2011 is akin to saying that the Titanic got delayed…
Either way, it’s a major understatement.
Early in November, the Japanese electronics and entertainment conglomerate not only had to report a $346-million loss for the previous quarter, but it also revised its annual earnings forecast downwards to an overwhelmingly depressing $1.2-billion loss for the fiscal year.
Meaning that Sony will have recorded four straight years of negative growth.
That probably seems surprising considering Sony’s impressive corporate history and equally notable product line. Founded in 1946, the company sells laptops – including the swanky VAIO line – televisions, cameras, desktops and gaming consoles.
Yet it can’t seem to catch a break.
Based in Japan, Sony blamed the strong yen along for lower sales – especially in their TV department – and heavy flooding in Thailand on top of the 2011 tsunami, both of which disrupted production.
Those excuses are all well and good, and even valid, but four years in a row isn’t a fluke. It’s a trend… and not a flattering one…
Sony Flops and Failures
In Sony’s defense, TV sales really have been dropping across the board for several years now. Much like the housing market, television sets are currently in a buyers’ market.
Well-established businesses like Panasonic (NYSE: PC) and Toshiba (TYO: 6502) have suffered right alongside Sony as prices just keep falling. As Yahoo! Finance’s Andrew Martin explains, “Even newer and more nimble competitors like Samsung and LG have struggled to make much money on TVs, if any.”
But all the same, Sony’s revenue fell in just about every area of its diversified business, from its Consumer Products and Services division, to its Music, Financial Services and Professional, Device and Solutions departments. In fact, the only thing that did well was Sony Pictures, where revenue increased by an admittedly impressive 17 percent.
Even revenue from Sony Ericsson, which it shares equal ownership with Swedish telecommunications company, Ericsson, fell 1.1 percent. And they sell phones, a market that seems to be all but recession proof these days.
Sure, the larger company didn’t make it onto Yahoo’s highly unflattering “Worst Product Flops of 2011″ list… unlike Netflix (Nasdaq: NFLX) for its harebrained and short-lived Qwikster, General Motors (NYSE: GM) for its all but un-sellable Volt and Research In Motion (Nasdaq: RIMM) for its disappointing attempt at a tablet with PlayBook.
But that’s hardly very comforting to Sony shareholders, whether loyal or prospective.
Not a Bet Worth Making
With all of that said, Sony does have a few factors in its favor, one of them being the nearly certain fact (or at least as certain as you can get in this crazy business climate) that it isn’t going anywhere anytime soon.
It’s here to stay and, even now, its teams are working hard at putting the finishing touches on what could be an exciting, new product lineup due out this year or shortly after.
That includes the PlayStation 4, which it’s currently keeping hush-hush. Investors and gamers alike might get some significant sneak peaks at it at the E3 gamers’ conference in Los Angeles in June, however.
Then there’s the PlayStation Vita, Sony’s latest portable gaming system, which consumers will be able to buy with Wi-Fi or 3G. And that’s not the only portable entertainment system it plans on debuting soon, since it also has high hopes for its upcoming Personal 3D Viewer.
As Business Insider describes it, the Viewer is “a full 3D home theater system… on your head,” all for just $800. Though, of course, that isn’t likely to sell like the electronic version of hotcakes in this poor global economy.
For that matter, there’s no guarantee that the other two products will, either. Not with products priced in the $100s and consumers still so jittery.
Whether that’s Sony’s fault or not doesn’t really matter in the end. Blame it on tough luck, bad management decisions, or some combination of the two.
But no matter who or what deserves the blame, investors should wait to see some signs of life from Sony before investing in them any time soon.
Good Investing,
Jeannette Di Louie
Article by Investment U
