Sony (SNE) shares hit three and a half year highs in Tokyo today after the company swallowed its pride and took a step back from the business-as-usual practices that have been plaguing it for more than a decade.
In yet another of what seem to be monthly investor updates Sony raised its margin guidance for its red-hot sensor business and announced that will cut back on television set offerings until the division is profitable, even if that means a sales drop of as much as 30%.
If we weren't talking about Sony these guys would actually look like a company hitting on many, if not all cylinders. Sony's PS4 has been crushing Microsoft's (MSFT) Xbox One. After one year of both consoles being on the market the PS4 has officially outsold the XBox 13.5 million to 10 million based on units shipped to retailers. Insiders say that the much more important metric of actual sell-through to consumers (remember, Microsoft has all those stores to stock with Xbox Ones) Sony may have as much as a 2:1 lead over the gang in Redmond.
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As for those cuts in TVs and smartphones, they are a great sign. Believe it or not Sony was once synonymous with state of the art televisions. Now it's all but impossible to tell the difference between the TV selling for $350 at Walmart (WMT) and the $1,000 top of the line at Best Buy (BBY).
Sony now has the lead in your living room, a streamlined business and bold leadership. To be honest I'm stunned they've done as well as they have. History suggests the company will turn this gold into dross somehow, but if Sony ever actually takes Dan Loeb's advice and spins off its studios to focus on a pared back electronics business the shares are very cheap. It's worth putting it on your radar as we enter a very device-friendly Christmas season.
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