PS4, Image Sensors & Music Business to Drive Sony's Growth

The latest round of restructuring has helped Sony Corporation SNE morph into an integrated multimedia company with diverse profitable operating divisions. Sony is the world's leading manufacturer of image sensors for cameras and CCTV. The consumer electronics giant's music business is also thriving.

Coming to its most significant growth driver, the PlayStation4 console is running strong even after three years of release. Earlier this month, Sony announced that it has sold over 60.4 million units of the console till date.

PS4's sales are more than double that of rival Microsoft Corp.'s MSFT Xbox One console, and quadruple of Nintendo Co.'s NTDOY Wii U console. PS4 clearly emerges as the leader in the current generation of video game consoles.

Sony's PlayStation ecosystem boasts over 70 million monthly active users across the world, as of the end of Mar 2017. Additionally, PlayStationPlus has roughly 26.4 million paid subscribers as of the end of Mar 2017. Further, Sony revealed that PS4 software sales are robust, with over 487.8 million copies sold at retail and through digital downloads.  

Coming to Virtual reality ("VR"), Sony is gearing up to capitalize on the burgeoning new field in the gaming world. The company has reportedly already sold 1 million PS VR headsets to date. The latest data, according to IDC, expects dedicated augmented reality and virtual reality headsets to grow to 100 million units by 2021. This is up from last year's roughly 10 million shipments and reflects a 5-year CAGR of 57.7%.

Sony's CEO – Kazuo Hirai – is optimistic about its strong gaming and semiconductor businesses, and recently announced that he expects the company's operating profit to reach ¥500 billion ($4.5 billion at current exchange rates) in the fiscal year ending Mar 2018. This is a level which the company hasn't achieved in over two decades. Moving forward, Hirai asserted that his goal is to maintain robust profitability in the years to come and he has already implemented major restructuring.

Sony's problems have arguably stemmed from operating in so many diverse areas, which made it difficult for the company to do well across the board. Its lucrative chip business, which produces images sensors for mobile devices, was disrupted last year due to a series of earthquakes that hit Kumamoto.

However, this company has created an impressive ecosystem of the PlayStation family, and its restructuring efforts and streamlined operations will help generate sustainable profit, thus driving future growth.

Another stock in the broader sector is Ubiquiti Networks, Inc. UBNT.

The Best & Worst of Zacks

Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Ubiquiti Networks, Inc. UBNT: Free Stock Analysis Report
 
Sony Corp Ord SNE: Free Stock Analysis Report
 
Microsoft Corporation MSFT: Free Stock Analysis Report
 
Nintendo Co. (NTDOY): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research