Why Apple Should Buy Sony:
- Gives them ownership of music, movies, both library and creation machine, so they can enter the new media distribution market and compete with a strong starting position
- Gives them a gaming platform and a living room presence with both PlayStation and TV
- Gives them a product cycle in digital camera
- Gives them ownership of high end camera technology, a defensive maneuver in smartphone which leaves peers on the outside
- A series of product cycles in waiting that need Apple-like innovation, marketing, and capital: TV, camera
- Gives them a Japanese life insurance company with secular tailwinds…ha ha ha, just kidding on that one
INVESTMENT TAKEAWAY:
In addition to cost controls already underway + a shift in focus to operating cash flow generation, Sony has a half dozen businesses with unexplored revenue and market upside especially in a world in which Apple’s cool, product know-how, marketing, and technology are matched with Sony’s existing efforts. We realize Sony is an Apple supplier, and expectations for a semis profit rebound at Sony in 2019 took a hit yesterday. But there is so much else happening at Sony including the battle for the biggest screen, the medium screen, the mirrorless lens, music (with EMI now a dominant label holder), the best gaming platform in the world with a large installed base, and a technology roadmap in semis that sustains value. These are the dips for buying SNE and winning in the transformation of a perennial loser to a potential winner.
Apple's current CEO has avoided making any such transformational acquisitions; so this idea might only be realistic in the regime of the next CEO.