Why Apple Should Buy Sony

01/04/19 08:43AM EST

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

Why Apple Should Buy Sony - SNE AAPL New

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.  

Please call or e-mail with any questions.

Ami Joseph

Managing Director

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Yosef Vaitsblit

Analyst

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