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Sony Acquires Sony/ATV Music Publishing

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Price movement 

Sony Corporation (SNE) has a market cap of $30.5 billion. It fell by 0.12%. It closed at $24.58 per share as of March 14, 2016. The price movement on a weekly, monthly, and YTD (year-to-date) basis is 5.9%, 21.3%, and -0.12%, respectively.

Currently, Sony is trading 10.8% above its 20-day moving average, 10.3% above its 50-day moving average, and 5.4% below its 200-day moving average.

The Vanguard FTSE Pacific ETF (VPL) invests 0.56% of its holdings in Sony. VPL tracks the FTSE Developed Asia Pacific Index—a market-cap-weighted index of securities in the developed markets in the Pacific region. VPL’s YTD price movement was -4.9% as of March 11, 2016.

The market caps of Sony’s competitors are as follows:

  • Canon Inc.-ADR (CAJ) – $39.4 billion
  • Harman International Industries (HAR) – $5.9 billion
  • Dolby Laboratories (DLB) – $4.0 billion
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Sony’s agreement with the Estate

Sony and the Estate of Michael Jackson, or the Estate, announced that SCA (Sony Corporation of America) signed a binding memorandum of understanding with the Estate to obtain full ownership of Sony/ATV Music Publishing LLC by acquiring the 50% interest in Sony/ATV held by the Estate.

The memorandum is $750 million. It includes a lump sum payment by SCA of ~$733 million and distributions committed by Sony/ATV to be paid to the Estate. The payment reflects contractual and accounting adjustments related to the Sony/ATV joint venture and other commercial opportunities involving Sony and the Estate. The definitive agreement will be executed by March 31, 2016.

Sony’s performance in fiscal 3Q15

Sony reported fiscal 3Q15 sales and operating revenue of 2,580.8 million yen—a rise of 0.55% compared to sales and operating revenue of 2,566.7 million yen in fiscal 3Q14. The sales and operating revenue from mobile communications, imaging products and solutions, home entertainment and sound, and devices fell by 14.7%, 5.0%, 4.3%, and 12.6%, respectively. However, the sales and operating revenue of game and network services, pictures, music, and financial services rose by 10.5%, 26.9%, 8.2%, and 5.6%, respectively, in fiscal 3Q15—compared to fiscal 3Q14.

The company’s net income and EPS (earnings per share) rose to 120.1 million yen and 93.33 yen, respectively, in fiscal 3Q15—compared to 90.0 million yen and 76.96 yen, respectively, in fiscal 3Q14.

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Meanwhile, its cash and cash equivalents and inventories rose by 14.9% and 11.5%, respectively, in fiscal 3Q15—compared to fiscal 4Q14. Its current ratio rose to 0.95 in fiscal 3Q15. Its DE (debt-to-equity) ratio fell to 4.0 in fiscal 3Q15—compared to a current ratio and a DE ratio of 0.88 and 4.4 in fiscal 4Q14.

On January 26, 2016, Sony entered into an agreement with Altair Semiconductor and its shareholders to acquire the company. The purchase price is $212 million. The company expects to close the acquisition by February 2016.

The company’s price-to-earnings and price-to-book value ratios are 33.7x and 1.3x, respectively, as of March 14, 2016.

Projections

The company made the following projections for fiscal 2015:

  • sales and operating revenue of 7,900 billion yen
  • operating income of 320 billion yen
  • income before income taxes of 345 billion yen
  • net income of 145 billion yen
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