Everything about Sony Corp.

SONY – make.believe

SONY – make.believe
SUBMITTED TO:
Dr. Michael J. Barnes,
Professor & Dean,
Jindal Global Business School

Analysis of SONY Corp.

By- Maneesh Garg (20110025) “11jgbs-
mgarg@jgu.edu.in”

01-Dec-11

SONY – make.believe 2011
Table of content

1. About SONY Corp.:

2. Functioning In India

3. Brief History

4. Major competitors of SONY

5. Research & Development

6. Financial Highlights

7. Stock Analysis of SONY

8. Ownership and Distribution of Shares

9. Stock Price (in $) trend NYSE of SONY (December’10 to Dec’11)

 NYSE

 SONY_Corp.

10. Beta value for Jan’11 to Dec’11

11. Major Financial indicators of SONY Corp.

12. Conclusion

 Points in Favour

 Points not in favour

13. Recommendation

14. References

By- Maneesh Garg (20110025) “11jgbs-mgarg@jgu.edu.in”
1

About SONY Corp.:

SONY CORPORATION is a Japan-based company mainly engaged in the manufacture and sale
of electronic products. This is a company of 168,200 employees(as of March 31, 2011).
The major products company manufacture are
Audio- Home audio, portable audio, etc.
Video- Video cameras, digital still cameras, and DVD-Video players/recorders, and Digital-
broadcasting receiving systems
Televisions- LCD televisions
Information and communications- PC, printer system, broadcast and professional use
audio/video/monitors and other professional-use equipment
Semiconductors- LCD, CCD and other semiconductors
Electronic components- Optical pickups, batteries, audio/video/data recording media, and
data recording systems
SONY Corp. has seven business segments.
Manufactures and sells televisions,
The Consumer
cameras, audio videos, semiconductors,
1. Professional Device
batteries, data recording systems and
(CPD) segments
other industrial equipment.

Designs, develops, and sells game
The Network
consoles, game software, personal
2. Products Service
computers (PCs), personal navigation
(NPS) segment
systems and portable audio devices.

3. The Movie segment Produces movies and television programs.

Produces and sells music software and
4. The Music segment
animation work.

Provides life and non-life insurance
The Finance
5. services, banking services and credit
segment
finance services.

The Sony Ericson operates mobile phone business
6.
segment

provision of Blu-ray disks, network
7. The Others segment
services and advertising agency services.

2


Functioning In India

One of the most recognized brand names in the world today, Sony Corporation, Japan,
established its India operations in November 1994, focusing on the sales and marketing of Sony
products in the country. In a span of 15 years Sony India has exemplified the quest for excellence
in the world of digital lifestyle becoming the country’s foremost consumer electronics brand.
With relentless commitment to quality, consistent dedication to customer satisfaction and
unparalleled standards of service.

With brands names such as BRAVIA, BRAVIA Theatre, Cyber-shot‚ Handycam®, VAIO,
Walkman®, Xplod, Memory Stick™‚ PlayStation®. Sony has established itself as a value leader
across its various product categories of Audio/Visual Entertainment products, Information and
Communications‚ Recording Media, Business and Professional products.

In India, Sony has its footprint across all major towns and cities through a distribution network
comprising of over 5000 dealers and distributors, 240 exclusive Sony outlets and 19 direct
branch locations. Manned by customer friendly and informed sales persons, Sony’s exclusive
stores ‘Sony Centre’ are fast becoming the most visible face of the company in India.

Sony India also has a strong service presence across the country with 20 company owned and
190 authorized service centres and 16 exclusive demonstration centres. A distinctive feature of
Sony’s service is its highly motivated and well-trained staff that provides the kind of attentive
and sensitive service that is rare today.
Brief History

3


Sony’s humble beginning started in Japan in 1946 from the sheer determination and hard work
of two bright and enterprising young men. Both Masaru Ibuka and Akio Morita joined hands in
making their dream of a successful global company a reality. Learn more about who we are and
what we do in this section.

It was in 1946 that Masaru Ibuka and Akio Morita together with a
small team of passionate and committed group of employees started
to build “Tokyo Tsushin Kenkyujo” (Totsuko), or “Tokyo
Telecommunications Research Institute” into the billion dollar
global conglomerate that it is today. The main objective of the
company was to design and create innovative products which would
benefit the people.

From early attempts at creating products like the rice-cooker to the later
success of creating Japan’s first magnetic recorder, the innovative
company went on to create other hit products which won the company
widespread recognition and international acclaim as a truly global
company known for its quality and innovative products. Significant
product milestones included Japan’s first transistor radio (1955),
Trinitron colour television (1968), Walkman personal stereo (1979),
Handycam video camera (1989), PlayStation (1994), Blu-ray Disc
recorder (2003) and PlayStation 3 (2006).

The company name of Sony was created by combining two words of
“sonus” and “sonny”. The word “sonus” in Latin represents words like
sound and sonic. The other word “sonny” means little son. Used in
combination, Sony is supposed to represent a very small group of young
people who have the energy and passion towards unlimited creations and
innovative ideas. With the far-sight of expanding worldwide, it was in
1958 that the company formally adopted “Sony Corporation” as its
corporate name. Easy to pronounce and read in any language, the name
Sony, which has a lively ring to it, fits comfortably with the spirit of
freedom and open-mindedness.

Major competitors of SONY
Panasonic Corporation
Pioneer Corporation
ToshibaCorporation
Foster Electric Co., Ltd.
Koninklijke Philips Electronics
Research & Development

4


5

Images showing the story of SONY………………

6

Financial Highlights
 Consolidated operating income was significantly higher, 6.3 times the previous fiscal
year's amount, despite the large, unfavorable impact of foreign exchange rates.
 The increase in consolidated operating income was driven primarily by improved results
in the Networked Products & Services segment, due principally to the contribution of the
game business.
 A net loss attributable to Sony Corporation's stockholders was recorded, mainly due to a
non-cash charge to establish a valuation allowance against certain deferred tax assets in
Japan.

7

Stock Analysis of SONY
Country Japan
Exchange NYSE
Symbol SONY
Market Cap (billion) 18.35B
P/E Ratio NA
Beta Coefficient 0.91
Earnings per Share -4.60

Ownership and Distribution of Shares

No. of shares (2011) = 1,004,636,664

Stock Price (in $) trend NYSE of SONY (December’10 to Dec’11)
NYSE

January start value= 8043.97 Value on 9 Dec.2011= 7502.88 % Change = -6.72%

SONY_Corp.

8


January start value= 36.38 Value on 9 Dec.2011= 18.28 % Change = -50% approx

From the graphs it is clear that trend of SONY Corp. stock is downside as market trend. SONY
Corp. stock price has shown huge decline of 50% from Jan’11 though market has fallen only 7%
approx. We can say stock is underperforming and its performance is also not in the line of
market trend. Beta estimation can help us to find out how much stock is correlated with market.

Beta value for Jan’11 to Dec’11

10 y = 0.909x + 0.220
Beta- Year 2011
R² = 0.418
8
Sony Corp. Return %

6

4

2

0
-6 -4 -2 -2 0 2 4 6 8

-4

-6

-8
NYSE Return %

Beta value for SONY Corp. stock is 0.917 for year 2011 which means SONY Corp. stock give
approx. 9% less return than market (NYSE) whether positive or negative so risk associate is

9

high. In this case SONY Corp. stock price has declined 50% from Jan’11 though market has
fallen only 7%.

To find out the risk involved with SONY Corp. stock, month wise volatility graph for 2011 is
shown below.

Volatility Jan. to Nov. 2011
3.50
3.16 3.24
3.00
2.50 2.42 2.44
2.25
2.00
1.68 1.65
1.50 1.46
1.25 1.31 1.18
1.00 Series1
0.50
0.00

It can be seen from the graph that volatility in the SONY stock is a little high from Jan’11 to
April’11, and from july to November its more volatile which means stock becomes more
risky.Major Financial indicators of SONY Corp.

Conclusion
Points in Favour:-

10

Only Sony makes everything you need to bring movies, music, games, photos and books to our
eyes, ears, fingertips, hearts and minds. That's why the shortest distance between content and
consumers is Sony. And that's why I believe that Sony will be in everyone's future, because Sony
is where entertainment meets technology.
Sony is constantly evolving to meet the demands and opportunities of the fast-changing global
business environment by creating innovative hardware, content and services. Sony is a market
leader with total Market Capital of 18.35 Billion. Company has very strong good will position. It
has diversified business in 7 major sectors. The company is known for its quality products and it
also has a very large range of electronic products for each segments. The company also has very
good reputation in terms of after sale service and quality of their products. There Focus Areas
for Growth -- Emerging Markets are-
India (Bolstered by successful television advertisements and in-store promotional efforts, in
fiscal year 2010 Sony garnered the top spot in the local markets for a variety of products,
including LCD televisions and compact digital cameras.),
Russia (in fiscal year 2010 Sony achieved record-high sales in the Russian market),
ChinaSony's focus in China is not limited to consumer products, but also broadcast- and
professional-use equipment, earning it a solid reputation as a top brand in HD and 3D from the
lens to the living room)
&Brazil (Brazil will host the 2014 FIFA World Cup Brazil™ -- for which Sony is one of the
Official FIFA Partners -- as well as the 2016 Summer Olympics).

Points not in favour:-
Though company’s operating profit is huge despite this company is facing net losses. Because of
this company’s stock performance is getting affected. SONY Corp. stock price is continuously
decreasing. Sony’s stock price has went down by approx. 50%, though the decrease in market is
just 7%. This is also because of large, unfavorable impact of foreign exchange rates. A net loss
attributable to Sony Corporation's stockholders was recorded, mainly due to a non-cash charge
to establish a valuation allowance against certain deferred tax assets in Japan.

Recommendation:-
After evaluating balance sheet, P&L account and after calculating different ratios it seems that
company has strong potential to do better in the market. But somehow possibly huge long term
debt making the company in loss. The decrease sales revenue also shows that Co. has not able to
recover the lost selling power. So it is recommended to “wait & watch”.

11


References:-
http://in.finance.yahoo.com/q?s=SNEJF.PK

http://www.google.com/finance?q=NYSE%3ASNE#

http://www.reuters.com/finance/stocks/financialHighlights?symbol=SNE.N

http://www.bloomberg.com/quote/SNE:US

http://www.google.co.in/

http://en.wikipedia.org/wiki/Sony_Corp

http://www.sony.co.in/section/home

http://www.sony.com/

http://www.sony.net/

THA U
NKY O

12

Everything about Sony Corp.

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