sony
New York symbol SNE, is one of the world’s leading makers of consumer electronics. Products include TV sets, computers and its PlayStation video game console. It also owns Columbia Pictures.
AMAZON.COM $131.29 (Nasdaq symbol AMZN; SI Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 433.0 million; Market cap: $56.8 billion) reported sharply higher results in the three months ended September 30, 2009. Revenue rose 27.8%, to $5.4 billion from $4.3 billion a year earlier. Earnings jumped 68.6%, to $199 million, or $0.46 a share, from $118 million, or $0.28 a share. That beat the $0.33 a share that analysts were expecting. Amazon’s North American media revenue rose 13% during the quarter. Overall media sales climbed 17%, to $2.9 billion. Revenue from electronics and other general merchandise jumped 44% to $2.4 billion. Revenue in the company’s “other” category, which includes Amazon’s web-services business, rose 25%, to $163 million. The company accounts for sales of its Kindle electronic-book reader in its electronics and general merchandise segment. It includes sales of Kindle books and other content in media sales....
SONY CORP. ADRs $29 (New York symbol SNE; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.0 billion; Market cap: $29.0 billion; Price-to-sales ratio: 0.4; WSSF Rating: Average) will let users of its PlayStation 3 video game player instantly view movies and TV shows from Netflix Inc. (Nasdaq symbol NFLX). Netflix operates an online movie-rental service with over 100,000 titles. Users will have to sign up with Netflix to use this service. However, Netflix already has 11.1 million U.S. subscribers, and many of them no doubt already own a PlayStation 3. This new service should also spur PlayStation 3 sales ahead of the Christmas shopping season. Sony is a buy.
AMAZON.COM INC., $118.49, symbol AMZN on Nasdaq, shot up 26.8% today after reporting sharply higher results in the latest quarter. In the three months ended September 30, 2009, Amazon’s revenue rose 27.8%, to $5.4 billion from $4.3 billion a year earlier. Earnings jumped 68.6%, to $199 million, or $0.46 a share, from $118 million, or $0.28 a share. That beat the $0.33 a share that analysts were expecting. Amazon’s North American media revenue rose 13% during the quarter. Overall media sales climbed 17%, to $2.9 billion. Revenue from electronics and other general merchandise jumped 44% to $2.4 billion. Revenue in the company’s “other” category, which includes Amazon’s web-services business, rose 25%, to $163 million....
INDIGO BOOKS & MUSIC INC. $12 (Toronto symbol IDG; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 24.5 million; Market cap: $294 million; Price-to-sales ratio: 0.3; SI Rating: Average) is Canada’s largest bookseller. Indigo operates 91 superstores under the Indigo, Chapters and World’s Biggest Bookstore brands. It also sells books online, and in smaller stores under the Coles, Indigo, Indigospirit, SmithBooks and The Book Company banners. In February, Indigo launched a new web site called shortcovers.com, which lets users download electronic books and magazines to their computers and mobile devices. Although e-books are still evolving, U.S.-based bookseller Amazon.com’s Kindle reader and devices from other companies, such as Sony, have spurred interest in them. As well, shortcovers will help Indigo compete if Amazon decides to bring the Kindle to Canada. Indigo’s losses in its first quarter, which ended June 27, 2009 rose to $0.09 a share from $0.05 a year earlier. That’s mainly because of the cost of launching shortcovers.com. As well, Indigo earns most of its money during the Christmas season, which falls in its third quarter. It typically earns little, or even posts losses, in the other quarters....
SONY CORP. ADRs $27 (New York symbol SNE; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1 billion; Market cap: $27 billion; Price-to-sales ratio: 0.4; WSSF Rating: Average) has launched a new version of its Play-Station 3 video-game console. The new version is thinner and uses less power than the previous model, which it is now phasing out. Sony has also cut the price of both versions by $100, to $299. The price cut should help Sony increase its share of the highly competitive video-game market. Sony is probably still losing money on each unit it sells, but the new models use fewer parts. This would shrink these losses. Selling more machines will also make it easier for Sony to demand more royalties from video-game developers. As well, more PlayStation 3 users should lead to higher online sales of games and movies. Sony is a buy.
Japan is heading into an election on August 30. Polls show the Democratic Party of Japan stands a good chance of defeating Prime Minister Taro Aso’s Liberal Democratic Party in the Japanese parliament’s lower house.
To spur economic activity, the Democratic Party of Japan plans to push for more aggressive stimulus spending, such as allowances for families with children, free public high-school education and cuts to the gasoline tax.
Under Prime Minister Aso, Japan’s government is spending 25 trillion yen ($284.6 billion Canadian) to help the economy grow. As in many other developed countries, this is taking the form of infrastructure spending, direct handouts to consumers and incentives for environmentally friendly products.
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To spur economic activity, the Democratic Party of Japan plans to push for more aggressive stimulus spending, such as allowances for families with children, free public high-school education and cuts to the gasoline tax.
Stimulus spending drives rebound
Government stimulus spending has already played a big role in the country’s recent turnaround. In the latest quarter, ended June 30, 2009, Japan’s economy posted an annualized growth rate of 3.7%. The turnaround comes after four quarters of steep contraction, and is one reason why investors are wondering if Japan is now a good place for offshore investing.Under Prime Minister Aso, Japan’s government is spending 25 trillion yen ($284.6 billion Canadian) to help the economy grow. As in many other developed countries, this is taking the form of infrastructure spending, direct handouts to consumers and incentives for environmentally friendly products.
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Many companies have cut their spending on information technology while they wait for the economy to start growing again. At the same time, consumers are buying less computer equipment as job losses push up the unemployment rate and erode confidence. Still, we feel that high-quality junior tech stocks have a bright long-term outlook. Despite the recession, the best of them remain profitable, and they’ll benefit further from pent-up demand as the economy recovers.
Cyberplex: An “Internet survivor”
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PEPSICO INC., $57.74, New York symbol PEP, increased its offer to buy its two main bottlers: Pepsi Bottling Group Inc. (New York symbol PBG) and PepsiAmericas, Inc. (New York symbol PAS). Both have now accepted PepsiCo’s offer, which is worth $7.8 billion. To put this in context, PepsiCo earned $1.7 billion, or $1.06 a share, in the second quarter of 2009. PepsiCo already owns 33% of Pepsi Bottling Group and 43% of PepsiAmericas. The company first offered to buy these bottlers last April for a total of $6 billion in cash and shares, but they rejected this amount as insufficient. In response, PepsiCo launched the new bid, which is a 30% increase over its first offer. The deal should close later this year, or in early 2010, and will give PepsiCo control over 80% of its North American beverage volumes. By consolidating plants and administrative functions, the company feels it can lower its annual costs by $300 million by 2012. That should add $0.15 a share to its annual earnings. Owning these bottlers will also make it easier for PepsiCo to launch new products, and react more quickly to changing consumer tastes in different regions....
CYBERPLEX $1.54 (Toronto symbol CX; SI Rating: Speculative) (416-597-8889; www.cyberplex.com; Shares outstanding: 64.8 million; Market cap: $99.7 million) sells a service that matches advertisers with electronic publishers. Cyberplex links advertisers’ campaigns with its 10,000 or so affiliates, which include web-site operators, bloggers and email marketers. Advertisers only pay if Cyberplex’s campaigns prompt users to do something, such as a fill out an online form or register at a web site. At the peak of the dot-com bubble of 2000, Cyberplex’s share price climbed as high as $35, and it had a market cap of almost $1 billion. Most of Cyberplex’s clients are smaller companies, such as Netflix, eHarmony and AcaiBerry Detox. But it also serves a number of larger organizations, including the U.S. army, DirecTV, FTD, Xerox, Sony Canada, IAC, Atlantic Lottery Corporation, Vista Print, Aecon, Ontario Power Generation, Scotia Bank and Royal Bank of Canada....
Cyberplex, $1.70, symbol CX on Toronto (Shares outstanding: 64.8 million; Market cap: $110.1 million), sells a service that matches advertisers with electronic publishers. Cyberplex links advertisers’ campaigns with its affiliates. These include web-site operators, bloggers and email marketers. Advertisers only pay if Cyberplex’s campaigns prompt users to do something, such as a fill out an online form or register at an advertiser’s web site. Cyberplex has a number of major companies as clients, including FTD, Xerox, Sony Canada, IAC, Atlantic Lottery Corporation, Vista Print, Aecon, Ontario Power Generation, Scotia Bank and Royal Bank of Canada. In the three months ended March 31, 2009, Cyberplex’s revenue jumped 307%, to $32.1 million from $7.9 million a year earlier. Earnings in the latest quarter were $4.1 million, or $0.08 a share, compared to $51,858, or nil per share. The company has no long-term debt. It recently issued new shares at $1.60 each. This raised $17.2 million....