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Sony Fell on Falling Apple iPhone Production

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Price movement of Sony

Sony (SNE) has a market capitalization of $30.2 billion. SNE fell by 7.2% to close at $23.63 per share on January 6, 2016, as a result of Apple’s iPhone 6S and 6S Plus fall in production. The stock’s price movements on a weekly, monthly, and year-to-date (or YTD) basis are -4.8%, -6.9%, and -4.0%, respectively.

Technically, the stock has broken support levels and is trading below all moving day averages. Currently, SNE is trading 4.4% below its 20-day moving average, 10.4% below its 50-day moving average, and 15.2% below its 200-day moving average.

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The Vanguard FTSE Pacific ETF (VPL) invests 0.56% of its holdings in Sony. The ETF tracks the FTSE Developed Asia Pacific Index, a market-cap-weighted index of securities in the developed markets of the Pacific region. The YTD price movement of VPL is -1.1% as of January 5, 2016. The Vanguard FTSE Developed Markets ETF (VEA) invests 0.22% of its holdings in Sony.

The market caps of Sony (SNE) and its competitors are as follows:

  • Canon (CAJ): $39.6 billion
  • Harman International Industries (HAR): $6.6 billion
  • Dolby Laboratories (DLB): $3.4 billion

Impact of Apple on Sony

After the increase in sales of PlayStation 4 and a resulting increase in stock prices on January 5, 2016, Sony fell by 7.2% on January 6. The shipment and inventories of iPhone 6S and 6S Plus have seen a slowdown. Plus, mild forecasts from suppliers led to a drop in the stock price of Apple by 2.0%.

Sony provides image sensors in digital cameras for the iPhone. Sony invested $1.3 billion in calendar 2015 to fulfill the demand. The slowness in the production of the iPhone 6S and the iPhone 6S Plus has dropped the share price of Sony and other Apple suppliers.

Performance of Sony in recent quarter

Sony (SNE) reported fiscal 2Q15 sales and operating revenue of $15.8 billion, a rise of 6.8% when compared to sales and operating revenue of $14.8 billion in fiscal 1Q15. Its net income and EPS (earnings per share) fell to $280.0 million and $0.22, respectively, in fiscal 2Q15, as compared to net income and EPS of $676.0 million and $0.58, respectively, in fiscal 1Q15.

Meanwhile, cash and cash equivalents and inventories rose by 64.7% and 23.4%, respectively, in fiscal 2Q15 on a quarterly basis. Its debt-to-equity ratio fell to 4.2 in fiscal 2Q15 as compared to a debt-to-equity ratio of 4.4 in fiscal 1Q15.

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