sony

ISHARES MSCI JAPAN INDEX FUND $15.05 (American Exchange symbol EWJ; buy or sell through a broker) is an exchange-traded mutual fund that tries to match the return of the MSCI Japan Index (Morgan Stanley Capital International Japan Index). The MSCI Japan Index is a benchmark for Japanese equity performance. The iShares Japan Index Fund charges a fee of 0.84% of assets. The fund’s top holdings are: Toyota Motor at 5.7%; Mitsubishi Tokyo Financial Group, 3.7%; Mizuho Financial Group, 2.9%; Sumitomo Mitsui Financial, 1.8%; Takeda Pharmaceutical, 1.8%; Honda Motor, 1.8%; Canon Inc., 1.7%; Sony, 1.6%; Matsushita Electric Industrial, 1.4%; and Nomura Holdings, 1.4%. Japanese investing was something of a craze for North Americans in the 1980s. Around the start of the 1990s, the Japanese stock market reached a peak and started to drop. It had fallen by more than 80% by May, 2003. The market has moved up since then, including a 56% rise over the last year. The market recently hit a five-year high....

GAMESTOP CORP. (New York symbols GME $41 and GME.B $37; WSSF Rating: Extra risk) operates over 4,400 stores in the United States and Europe that sell video game players and software. It also publishes a video game magazine. In October 2005, GameStop paid $1.44 billion (70% in cash and 30% in stock) for rival video game retailer Electronics Boutique. That’s a huge investment for the company, which earned $1.17 a share (total $67.7 million) in the fiscal year ended January 31, 2005. Thanks to the takeover, GameStop’s sales in the nine weeks ended December 31, 2005 rose 133% to $1.35 billion. However, if you assume that GameStop acquired Electronics Boutique a year earlier, pro forma same-store sales fell 1.5% due to shortages of Microsoft’s new Xbox 360 video game console....

When a company sets up one of its subsidiaries or divisions as a separate company and hands the stock out to its investors as a special dividend, it tends to unlock hidden value. Over time, the combined value of the post-spinoff parent and spun-off company usually exceeds the value of the parent before the spin-off. Mind you, this is a general tendency, not a guarantee of continued profit. Nor does it provide protection against the effects of a bad market. During the Internet boom of a few years ago, for instance, many tech stocks spun off their Internet divisions. When that boom turned to bust, these Internet spin-offs plunged with the rest of the sector. Here is our updated analysis of spin-offs carried out by stocks we recommended. All three paid off and helped unlock some of the hidden value in the parent company. But not all of them are buys....

SONY CORP. $47 (New York symbol SNE; WSSF Rating: Above average) is one of the world’s largest makers of consumer electronic products such as TV sets, DVD players and stereo equipment. This business supplies two-thirds of its revenues. The remaining third comes from its PlayStation video game players, its film and TV studios, and its financial services division. In the past few years, Sony failed to anticipate the strong demand for big screen TV sets that use either plasma or LCD (liquid crystal display) technologies. That let other companies cut into its market share. Meanwhile, its famed Walkman portable music players lost market share, mainly to Apple’s iPod. Now, however, Sony is restructuring its TV business, to focus on new flat screens. This will cost roughly $900 million, but should cut way back on its operating costs, starting with a $50 million saving in fiscal 2007 (fiscal years end March 31)....

Today, all too many investors try to take investment cues from short-term developments like quarterly earning reports, the timing of new product releases and so on. However, no one can consistently predict these short-term factors. That’s why you’re far better off to base investment decisions on trends and developments that last for years if not decades. That’s especially true with a stock like Sony, which has been out of favor with investors since the 1990s and now trades below its 1997 peak. Though its earnings were irregular and it made some bad business decisions, Sony built up a great deal of hidden value in that time. It now seems set for far better results in the next seven years....