Sony (SNE) Aims to Tap Mobile Gaming Market With Xperia 5
Sony Corporation SNE is reportedly gearing up for the launch of Xperia 5 – a premium Android smartphone priced at $900 – in October. Leveraging the immense popularity of PS4, the company expects to capture a greater pie in the esports domain with this smartphone as it supports wireless PS4 controllers.
Boasting a 21:9 aspect ratio display, which is wider than the standard 16:9 and 18:9 screens found on most other smartphones, Xperia 5 is typically aimed at gaming buffs. The 6.1-inch display phone with Snapdragon 855 chipset from Qualcomm Incorporated QCOM lets users connect with a PlayStation DualShock 4 wireless controller, and works perfectly with Epic Games’ popular battle game “Fortnite”.
The smartphone makes mobile gaming much easier by offering a compact console. This, in turn, will enable the company to stay relevant to a mobile-centric audience as well as to casual and professional gamers, who prefer to remain engaged with mobile gaming and competitive esports on the go.
Sony has been taking a series of concerted efforts to attain a leaner organizational structure to augment growth. The company announced a number of changes in its internal administration and reshuffled operating segments. Sony believes that converting its business units into distinct subsidiaries will enhance its organizational independence as each independent unit set high targets in an effort to accomplish the company’s mid-term targets. It believes that these steps will allow it to generate sustainable profit, accelerate decision-making processes and reinforce business competitiveness, which augurs well for future growth.
Sony has also undertaken a number of measures in its Branded Product Business, which includes Mobile Communications, Imaging Product & Solutions, and Home Entertainment & Sound segments, to ensure stronger growth. A number of measures, including cost reduction, lower exposure in low-profit geographic regions and reduction in advertising & promotion expenses are expected to benefit this business in the long run. Going forward, Sony plans to concentrate mainly on the premium segment of the branded products market to maximize its growth potential.
However, Sony's smartphone business has been a laggard for the past few quarters with revenues declining 31% year over year in fiscal 2018 to 498 billion yen ($4.6 billion). Its operating loss widened from 27.6 billion yen to 97.1 billion yen ($890 million) as smartphone shipments plunged 52% to 6.5 million.
Despite the setbacks, the company continues to innovate and introduce newer models with superior features to stem the losses. It remains to be seen if Xperia 5 can reverse the trend and reap profits for the company.
The stock has outperformed the industry in the past year with an average return of 5.9% compared with a rise of 2.2% for the latter.
Sony currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader industry are Nokia Corporation NOK and Viasat Inc. VSAT, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Nokia beat earnings estimates thrice in the trailing four quarters, the average positive surprise being 89.3%.
Viasat beat earnings estimates in each of the trailing four quarters, the average positive surprise being 230.6%.
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