Sony Can No Longer Compete Against Samsung and Apple

Sony has been losing money the past couple of years as competitors Samsung and Apple eat away at its business, so what should the company do to survive?

May 21, 2014 at 11:45PM

Sony (NYSE:SNE) has been losing market share to the likes of Apple (NASDAQ:AAPL) and Samsung (NASDAQOTH:SSNLF) for the past couple of years in the realm of televisions, smartphones, and other electronics. The company's PlayStation gaming consoles remain popular, however, and Sony has found success with them throughout the years. Sony has been reporting losses lately; the electronics maker reported a loss in its last quarter and in 2011 and 2012, while eking out a small profit in 2013.

Over the last five years
Sony's revenue has declined 5% on average the last five years while its net income has fallen even further, dropping almost 35% per year on average over the same period . Apple, on the other hand, has grown its revenue by 39% per year on average over the last five years. On top of that, Apple's net income has ballooned to average 50% increases over the last five years. Samsung has also done well over the last five years, averaging 44% income gains on average with 40% increases in net income. It is clear that Sony has been really struggling over the last half decade, while Apple and Samsung have blossomed and acted as juggernauts to some of Sony's business lines.

Sony Over Last Five Years

Source: Yahoo Finance

The dismal performance of Sony and the extraordinary performances of Apple and Samsung are evident in their stock returns over the last five years. Sony's stock has declined considerably over the last five years with a drop of 37%. In sharp contrast, Apple's stock has appreciated close to 400% and Samsung's stock has done well also with an increase of 200% over the last five years. The chart lends some credence to the belief that over the long-term, stocks do in fact track the underlying performances of the businesses they represent.

What have you done for me lately?
Sony has also diverged from Apple and Samsung recently in addition to lagging the companies over the last five years. Over the last twelve months ending March 2014, the Japanese electronics maker has recorded a loss of 130 billion yen -- or $1.3 billion. The loss was particularly painful as Sony expected to actually generate a profit of 30 billion yen this year. The loss also occurred despite Sony recording an increase in revenue of about 1% to 7.77 trillion yen over the last twelve months .

In its most recent fiscal year, Apple realized a decline in net income of 11% and in earnings per share of 10%. Its revenue rose by 9% in 2013 as compared to 2012, however. Apple really shined in its latest quarter, reporting an increase in revenue of almost 5% to $45.6 billion. The resulting net income grew by 7% to $10.2 billion and the earnings per share ballooned to just over 15% to $11.62 in the 2014 second quarter compared to year ago quarter. Apple seems to be picking up steam, especially with its latest version of the iPhone.

Samsung's last fiscal year ending December 2013 was spectacular. Its net income rose almost 29% on an increase in revenue of almost 14% compared to the 2012 fiscal year. The resulting earnings per share also rose by a wide margin of 28%. However, Samsung's recent earnings have not been as stellar as Apple's as the company's earnings have declined over the last two quarters. Moreover, Samsung's revenue fell by a considerable 9% in just its last quarter. Nevertheless, Samsung's problems are a far cry from Sony's at the moment as the South Korean company is still profitable.

Sony's future
At this point, Sony would be better off if it separated its divisions into separate companies. This would allow its PlayStation brand to blossom, its movie division to concentrate on movies, and its struggling divisions to focus on their operations and not have their managements distracted by other endeavors. Perhaps Samsung or Apple could buy one or more of Sony's divisions and integrate them into their own companies.

Interestingly, hedge fund manager Daniel Loeb is advocating for a break-up of Sony, so a separation could be coming within the year. Loeb believes that the sum of the company's parts could be more valuable than all of them as a whole; the company's movie division is responsible for the "Spider-Man" films, for instance, and its music division counts Miley Cyrus as one of its artists. Sony's investors should monitor the situation closely and evaluate if Loeb's assertion is good for the future of Sony.

3 stocks poised to be multi-baggers like Apple and Samsung
The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Our analysts have found multi-bagger stocks time and again. And now they think they've done it again with three stock picks that they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.

Andrew Sebastian has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers