Please ensure Javascript is enabled for purposes of website accessibility

Why Sony Corp. (ADR) Stock Popped Today

By Steve Symington - Jan 29, 2016 at 12:21PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Sony popped on a solid earnings report for its important holiday quarter.

What: Shares of Sony Corp. (ADR) (SONY 1.14%) were up more than 17% as of 11:00 a.m. ET Friday after the company announced better-than-expected fiscal third-quarter results.

So what: Quarterly revenue climbed 0.5% year over year to 2,580.8 billion Japanese yen (JPY) (or roughly $21.5 billion). Sony also demonstrated 11% growth in operating income to JPY202.1 billion (or $1.685 billion), 33.5% growth in net income attributable to Sony stockholders of JPY120.1 billion (or $1 billion), and 21.3% growth in net income per diluted share to JPY93.33 (or $0.78).

Analysts, on average, were anticipating lower revenue of JPY2,523.1 billion and earnings per share of just JPY73.69.

Sony's top line was driven by strong growth from the pictures segment (up 26.9% to JPY262.1 billion), helped by strong theatrical showings for both Spectre and Hotel Transyvania 2. Meanwhile, Playstation4-fueled software sales contributed to impressive performance from the game and network services segment, where revenue climbed 10.5% to JPY587.1 billion, and Sony's music unit enjoyed 8.2% revenue growth to JPY181.2 billion. But this growth was almost entirely offset by softness in the smartphone market, which drove a 14.7% decline in mobile communications sales to JPY384.5 billion, as well as a 12.6% decline in devices revenue (think batteries, image sensors, and camera modules) to JPY249.9 billion, and a 4.3% decline in home entertainment and sound to JPY402 billion.

Now what: Looking forward to rest of fiscal 2016 (ending March 31, 2016), Sony now expects full fiscal-year revenue of JPY7,900 billion, which was below analysts' estimates for JPY8,122 billion. At the same time, however, that's not terribly surprising given current economic headwinds and the impending deceleration of smartphone sales growth as indicated by Sony's devices segment performance. And given Sony's relative outperformance from arguably its two most promising segments in the crucial holiday quarter, it's no surprise investors are willing to overlook its underwhelming forward view.

Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sony Corporation Stock Quote
Sony Corporation
$86.80 (1.14%) $0.98

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/15/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.