In trading today, Sony Corporation (NYSE:SNE) announced their new mid-term business plan, with the stock jumping over 5% on the back of it. The question is, does this business plan look like it will work?
Sony’s (NYSE:SNE) new mid-term business plan appears to have been well received by the market with SNE jumping over 5% on the back of the news. It took the stock as high as it has ever been in nearly the last 5 years. The new mid-term plan aims to increase operating profit of Sony by some 25 times current levels, within as little as 3 years, quite a bold and ambitious plan.
Sony intends to do this by growing their Playstation gaming console and camera sensor units. With SNE’s other divisions such as television and mobile struggling, we can certainly see why they intend to focus their efforts here. At the same time Sony intends to spin-off their video and sound segment.
Such a refocus by Sony’s (NYSE:SNE) into these two far more profitable areas makes sense and we think the news is certainly positive. Too much capital is being tied up in these low profit areas and the shift in focus means it can be better used in other areas. Of course this move means they have less diversification into other areas, but with Playstation outpacing XBOX by a large amount, it would appear Sony is winning the war with their only real major competitor in the space. It is also warming to see management making active moves, rather than waiting for a turnaround in the market, which either often never occurs, or by the time it does, the company has not moved forward to keep pace with competitors.
SNE closed at $28.02 in trading yesterday after moving upward 5.34%.