Selected Reads

Smartkarma

Equity Bottom-Up

Weston Nakamura closes his long Sony Corp. (NYSE: SONY)/short Technology Select SPDR Fund (NYSE: XLK) market-neutral pair trade, as SONY shares rallied following an intraday trading halt on news of its acquisition of Bungie for $3.6 billion Weston shares his thought process and overall assessment. Though it was a net-profitable trade in an environment of elevated global equity volatility, Weston’s frank self-evaluation is that this was a flawed structure. He categorizes this win as “right for…

QUICK Corp.

G&amp;NS is showing a gradual expansion trend
In FY3/21, despite the launch of the new game console [PS5] during the year-end shopping season, the OP from Game &amp; Network Services (G&amp;NS) increased significantly, reaching JPY342.2bn (+44% YoY). In FY3/07, when [PS3] was launched, and in FY3/14, when [PS4] was launched, profitability deteriorated significantly; but this time, it is a different story. In the past, the initial selling price of a new game console was often less than the total of its…

FY3/21 is likely to be a noteworthy fiscal year for Sony's game business. Although segment-wise operating results have deteriorated in the fiscal years in which new stationary game consoles were introduced, OP is expected to increase significantly in FY3/21 with the launch of 'PS5'. Looking at the past results, sales in the game-related segment expanded in FY3/07 when 'PS3' was launched and in FY3/14 when 'PS4' was launched, but OP deteriorated mainly due to initial costs. However, we, QUICK…

Morningstar

Morningstar, Inc.

We revise no-moat Sony’s fair value estimate to JPY 6,000 per share and initiate the coverage of Sony’s U.S. ADR with a $55 fair value estimate. The two major reasons cutting our fair value estimate are: 1) we lowered shipment forecast of image sensors as we expect that smartphone’s replacement cycle will be longer than anticipated; and 2) we consider that the operating loss of Sony’s mobile business will be larger, considering the intensifying competition in Japan. Meanwhile, we retain our view…

We lift our fair value estimate for Sony to JPY 6,800 from JPY 6,000 as we revise our view on the PlayStation business. We had been underestimating the diffusion of online business, which will be the game changer of the industry, extending the console life and mitigating the trough of the platform cycle. As we revise our forecasts, profit from the game segment is likely to be much higher than we had originally anticipated. In addition, while we are concerned about Sony’s hardware businesses…

Japan

Sony Corporation manufactures audio, home video game consoles, communications, key device and information technology products for the consumer and professional markets.  The Company's other businesses include music, pictures, computer entertainment, and online businesses.

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