"It's a Sony." Once upon a the time, the Sony (NYSE: SNE) tagline was a promise. Yet after a year of burning batteries, store shelves empty of longed-for Playstation 3s, and LCD camera displays that didn't (display, that is), the tagline has almost become a curse. Can tomorrow's Q4 2006 earnings news help to turn investors' frowns upside down?
After the news comes out, we'll have time aplenty to dissect it. But in these few hours before we begin obsessing over Sony's short-term progress, let's take a moment to review what investors think about it as a long-term investment. Our tool in this endeavor: Motley Fool CAPS, where more than 28,000 investors offer their views on well over 4,000 companies, Sony among them. Here's what Fools have to say about the company.
Up or down?
More than 600 investors have submitted ratings on Sony. Their verdict: Sayonara, Sony.
Only 58% of CAPS investors expect Sony to outperform the market, and if you focus on what the very best investors are saying, the stock's chances seem reduced to a coin toss. Only 51% of CAPS All-Stars think Sony's a winner. Need I even say it? Sony gets just one out of five possible CAPS stars (probably because we don't give "zero" as an option).
Within its CAPS peer group, Sony tumbles to the bottom of the heap:
|
Electronic Equipment Group |
|
|---|---|
|
Nintendo (Pink Sheets: NTDOY) |
***** |
|
Phillips |
**** |
|
General Electric |
*** |
|
Matsushita Electric |
*** |
|
AO Smith |
*** |
|
Echostar |
** |
|
Sony |
* |
Wall Street vs. Main Street
Wall Street couldn't disagree more. All four of the professional analysts whose ratings we track expect Sony to outperform the market. Yet it's lagged the S&P 500 average by about two points over the last 52 weeks.
Bull pitch
The bull thesis on Sony can be summed in four words: "Playstation 3," "Spider-Man," "Blu-ray," and "brand." Bulls expect the first two to provide the near-term catalysts for Sony's turnaround. Meanwhile, the latest installment in the Spider-Man saga, plus continued sales of the company's new gaming console, will provide hefty cash contributions to the business. Longer term, they expect Sony's premier brand, and its contender for the new generation of high-density DVDs, to keep the company going far into the future.
Bear pitch
Bears raise numerous counterarguments, ranging from the oft-heard complaint: "it's overpriced" (at 54 times earnings, not an unreasonable criticism), to consumer-inspired ire at the company's less-than-stellar customer service. One CAPS All-Star does a particularly great job of listing his objections: "Their five year growth rate is a negative 6.7%, yet they sport a P/E ratio over 50. ... They face lots of competition in every business segment, with poor results. ... Their CD based music business is getting killed by downloads. ... Walkman vs. iPod- enough said. ... Tivo and broadband delivery of content clobbers the DVD and CD players. ... Games- Playstation is losing ground to xbox and Wii. ... Did I forget to mention burning batteries?" Ouch. At this point, is there any need to?
Who said that?
To learn the identities of the wise Fools who penned these thoughts, and explore the plethora of additional financial data we've put together on the company, just click here.
Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 999 out of nearly 29,000 raters. Nintendo is a Stock Advisor pick. The Fool has a disclosure policy.
