Is the King back in the building? Electronics and entertainment giant Sony
Sony is like a keiretsu unto itself, with operational segments as diverse as electronics, financial services, motion pictures, and video games, not to mention part-owner interests in music publishing with Bertelsmann AG and cell phones with Ericsson
This time, the insurance and banking operation lost its mojo due to a weak Japanese stock market, and while entertainment revenues shot up by more than 40% on the back of The Da Vinci Code, marketing expenses for upcoming movies and reduced high-margin DVD sales never let that increase reach the bottom line. The internal-performance crown once again rests on the electronics division.
The electronics division is Sony's workhorse, much like its counterparts at Toshiba and Matsushita
This quarter saw a turnaround in Sony's electronics results, however. Television revenues surged 77%, led by the Bravia line of LCD TVs, and the division squeezed out a 3.7% operational margin. It may not sound like much, but with 1.3 trillion yen in electronics revenue, every margin point makes a huge difference. The 47.4 billion yen ($412 million) the division produced made all the difference between red and black for the entire company.
While Sony's days of premium price points are long gone, new CEO Howard Stringer seems to be doing a great job of tightening operations. If the improvements to operational efficiency continue, the stock's 35% value boost since last year should as well, PlayStation 3 launch issues notwithstanding.
Further decoded Foolishness:
- Sony is finding new ways to market its wares.
- How different things were only six months ago!
- Philips is worth a closer look, too.
Fool contributor Anders Bylund 's first CD player was a Sony Walkman. He didn't enjoy that Tom Hanks movie nearly as much as the online games used to promote it. He also doesn't own any stock in any of the companies mentioned today. You can see for yourself , because Foolish disclosure is cool like that.