Sony Corp. SNE has announced plans that it will expand its long-standing partnership with Carl Zeiss AG (branded as ZEISS), from digital imaging to Xperia smartphones. The Tokyo, Japan-based company’s latest flagship smartphone — the Xperia 1 II (pronounced as Xperia One, Mark Two) — is the successor to the Xperia 1 from last year. It is also Sony’s first 5G smartphone.
Built for speed, the Xperia 1 II features some meaningful improvements over the Xperia 1, with unique camera features. The device has a 6.5-inch 4K HDR OLED display with a tall 21:9 aspect ratio. It is powered by a Snapdragon 865 chipset, 8GB RAM, 256GB of storage and a 4,000mAh battery with 21W fast wired charging. Owing to the Snapdragon X55 modem, the Xperia 1 II will support sub-6GHz 5G networks in Europe. In other parts of the world, the device will only support 4G networks.
Xperia 1 II offers the world’s first smartphone with up to 20fps AF/AE tracking burst and 5G connectivity for a creative entertainment experience. Sony is working on the Xperia Pro, a pro variant of the Xperia 1 II for the U.S. market, that will be designed for use by broadcast video production professionals. It will feature 5G mmWave connectivity and an HDMI port that will allow it to be directly hooked into professional cameras.
Germany-based ZEISS is considered to be a leading manufacturer of optical systems and optoelectronics. Sony and ZEISS have built on the long-shared history and expertise since the launch of Sony’s first video Hi8 Handycam CCD-TR555 in 1996. Sony’s new smartphone will feature ZEISS optics with T-Star anti-reflective coating to enhance the quality of images and deliver the best photography experience to consumers.
In third-quarter fiscal 2019, sales in Sony’s Electronics Products & Solutions (EP&S) business came in at ¥650.4 billion, down 8.8% on a year-over-year basis. This was due to decrease in unit sales of smartphones and televisions, and impact of foreign exchange rates. That said, the segment’s operating income improved to ¥80.3 billion from ¥66.2 billion in the year-ago quarter, backed by reduction in operating costs mainly within Mobile Communications.
Sales in Imaging & Sensing Solutions (I&SS) segment were up 29.4% to ¥298 billion driven by significant increase in sales of image sensors for mobile products. The segment’s operating income was ¥75.2 billion compared with ¥46.5 billion in the prior-year quarter.
In January 2020, Sony said that it is developing a silicon-based vision sensor for autonomous vehicles in order to gain a foothold in the electronics market. The company is joining the race to develop LiDAR (Light Detection and Ranging) vision-sensing technology, which is a vital part of safety and functionality in self-driving vehicles.
Sony raised its forecast, which was announced on Oct 30, 2019, for consolidated results for the fiscal ending Mar 31, 2020. It expects operating revenues to be ¥8,500 billion, up from the previous guidance of ¥8,400 billion. This indicates higher-than-expected sales, primarily in the Financial Services and I&SS segments.
Sony’s shares have surged 33.3% compared with 24.7% growth recorded by the industry in the past year.
The stock is currently trading with a forward P/E of 14.55X. The Zacks Consensus Estimate for its current year earnings has been revised 7.9% upward over the past 60 days to $4.37.
Sony currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader sector are Motorola Solutions, Inc. MSI, Qualcomm Incorporated QCOM and PCTEL, Inc. PCTI, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Motorola has trailing four-quarter positive earnings surprise of 6.6%, on average.
Qualcomm has trailing four-quarter positive earnings surprise of 10%, on average.
PCTEL has trailing four-quarter positive earnings surprise of 150.6%, on average.
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