Per media reports, Sony Corporation SNE will likely shift its consumer electronics business' European headquarters from the United Kingdom to the Netherlands, in a bid to ensure continuity of its operations on account of Brexit-related disruptions.
The Japanese electronics giant had set up a new company in the Netherlands in December last year, which will be combined with its U.K.-based Sony Europe by the end of March this year. Notably, most Japanese firms are advancing with plans to move their businesses out of the United Kingdom due to continual chaos over Britain's planned exit from the European Union.
Sony stated that while the registration will be changed to the Netherlands, none of its 900 employees at Sony Europe, dealing with sales and marketing activities, will be moved out of the United Kingdom. Also, the company will continue to pay taxes in Britain.
The strategic move will therefore allow Sony to remain in the European Union Customs Union while safeguarding itself from the potential risks arising from post-Brexit turmoil, like change in labels for its products.
Prevailing Business Scenario
Sony's Game & Network Services segment has lately proved to be one of the strongest growth drivers due to rise in game software sales. PlayStation - the company's flagship gaming product - is acting as a solid growth catalyst for the past quarters. Increase in media networks and television sales as well as insurance premium revenues are expected to stoke growth of the Pictures and Financial Services segments, respectively. Music sales are anticipated to be driven by strong visual media sales as well as recorded music sales. The company expects demand for image sensors for mobile products to grow, which in turn will drive Semiconductors sales. The company recently announced that it is ramping up production level of its next-generation 3D camera sensors for 2019 in response to rising demand from several customers.
Furthermore, Sony has been making efforts to attain a leaner organizational structure to better focus on business growth. The company announced a number of changes in its internal administration and reshuffled operating segments. Sony believes that this will enable it to generate sustainable profit, accelerate decision-making processes and reinforce business competitiveness. Moving ahead, the company intends to concentrate mainly on the premium segment of the branded products market to augment its growth potential.
Owing to proper execution of operational plans, Sony's shares have recorded an average gain of 59% compared with growth of 37.4% for the industry over the past two years.
Zacks Rank and Stocks to Consider
Sony currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the broader industry include News Corporation NWSA , MSG Networks Inc. MSGN and Twenty-First Century Fox, Inc. FOXA . While News Corporation sports a Zacks Rank #1 (Strong Buy), MSG Networks and Twenty-First Century Fox carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
News Corporation has a long-term earnings growth expectation of 9.3%.
MSG Networks has a long-term earnings growth expectation of 10.6%.
Twenty-First Century Fox has a long-term earnings growth expectation of 9.2%.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 - 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Sony Corporation (SNE): Free Stock Analysis Report
MSG Networks Inc. (MSGN): Free Stock Analysis Report
Twenty-First Century Fox, Inc. (FOXA): Free Stock Analysis Report
News Corporation (NWSA): Get Free Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of NASDAQ, Inc.