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Sony Corporation Partners with Dalian Wanda Group

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Price movement

Sony Corporation (SNE) has a market cap of $43.3 billion. It rose 1.4% to close at $33.91 per share on September 22, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 4.4%, 2.4%, and 37.8%, respectively, on the same day.

SNE is trading 3.7% above its 20-day moving average, 5.6% above its 50-day moving average, and 26.1% above its 200-day moving average.

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Related ETF and peers

The Vanguard FTSE Pacific ETF (VPL) invests 0.56% of its holdings in Sony. This 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 was 9.5% on September 22.

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

  • Canon Inc.-ADR (CAJ) — $39.1 billion
  • Harman International Industries (HAR) — $5.9 billion
  • Dolby Laboratories (DLB) — $5.5 billion

Latest news on Sony

In a press release, Bloomberg reported, “Billionaire Wang Jianlin’s Dalian Wanda Group Co. agreed to collaboration on movie projects with Sony Corp.’s film unit as the Chinese tycoon build on his ambitions to expand in Hollywood.”

The release continued, “Wanda will invest in productions from Sony Pictures as part of an open-ended partnership, the Chinese company said in a statement on Friday. In turn, Wanda will ‘highlight the China elements’ in the movies it invests in, it said.”

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Performance in 1Q16

Sony (SNE) reported 1Q16 sales and operating revenue of 1.6 trillion Japanese yen (about $16 billion), a fall of 10.8% from the 1.8 trillion yen reported in 1Q15. Sales and operating revenue from the company’s various segments follow:

  • Mobile Communications: fell 33.9%
  • Imaging Products and Solutions: fell 26.4%
  • Home Entertainment and Sound: fell 7.0%
  • Semiconductors: fell 21.4%
  • Components: fell 22.8%
  • Financial Services: fell 16.8%

Sales and operating revenues from the company’s Game and Network Services, Pictures, and Music segments rose 16.9%, 6.8%, and 8.7%, respectively, between 1Q15–1Q16. Sony reported a gain of 50.8 billion yen (about $498 million) on the sale of securities investments in 1Q16. The company’s operating income fell 42.0% between 1Q15 and 1Q16.

Sony’s net income and EPS (earnings per share) fell to 21.2 billion yen (about $208 million) and 16.44 yen (about $0.16), respectively, in 1Q16, compared with 82.4 billion yen (about $807 million) and 70.36 yen (about $0.69) in 1Q15.

Sony’s cash and cash equivalents fell 35.8% and its inventories rose 5.1% between 4Q15–1Q16. Its current ratio fell to 0.85x and its DE (debt-to-equity) ratio rose to 4.34x in 1Q16, compared with 0.87x and 4.33x, respectively, in 4Q15.

Projections

Sony (SNE) made the following projections for 2016:

  • sales and operating revenue of 7.4 trillion yen (about $72 billion)
  • operating income of 300 billion yen (about $2.9 billion)
  • income before income taxes of 270 billion yen (about $2.6 billion)
  • net income of 80 billion yen (about $784 million)
  • sales and operating revenue growth from the Mobile Communications; Game and Network Services; Imaging Products and Solutions; Home Entertainment and Sound; Semiconductors; Components; Pictures; Music; and Financial Services segments of -25.5%, 2.5%, -21.1%, -13.7%, -5.3%, -11.0%, -1.9%, -11.0%, and 6.2%, respectively

The above sales forecasts include the impact of foreign exchange rates and decreasing sales in the Mobile Communications, Pictures, and Game and Network Services segments.

Next, we’ll discuss General Motors (GM).

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