Sony Corp (ADR) (NYSE:SNE) is in the early stages of a true recovery, Pelham Smithers said in a recent discussion on CNBC.
The comment comes after Sony Corp (ADR) (NYSE:SNE) has momentarily silenced cynics as net income for the company’s first quarter 2014 rose six-fold to JPY26.8 billion ($261 million). Total sales for the three months ending in June also grew by 6% to $17.9 billion.
According to Smithers who is the Managing Director of Pelham Smithers Associates, Sony Corp (ADR) (NYSE:SNE)’s numbers may not be that impressive if you compare it to Apple Inc. (NASDAQ:AAPL) or Samsung Electronics but they give observers the view that the company is at the start of a “genuine recovery”.
“The headline sounds good. Operating margins are 3%. So if you apply that to Samsung or Apple, you wouldn’t be very impressed. But it is, shall we say, the early days of what seems to be a genuine recovery. Only one of their divisions lost money. That was the mobile division. That was even a small amount. Even televisions which has been losing money [for Sony]year in, year out, made a small profit this quarter. So, they definitely get marks for effort. Now they have to keep going,” he said.
Smithers was then asked why Sony Corp (ADR) (NYSE:SNE)’s smartphone business is losing money despite making effort in this market. According to the executive, the company makes great smartphones but just does not have the selling channel to back this up.
“When it came out, the Xperia Z2 was probably the best handset of its type on the market. The problem is that [Sony] does not have good distribution. They have almost no distribution in America. They are highly reliant on the Japanese market and the U.K. market, both of which [are]incredibly competitive because everybody sells into these markets,” he said.
Watch the discussion about Sony Corp (ADR) (NYSE:SNE) below.