Tuesday, October 28, 2008
The power of focus: Apple & Nintendo vs SONY
Lets benchmark three iconic companies:
- APPLE: Wednesday October 22 APPLE announced spectacular full-year results with a year-on-year net income increase of 38%. The results are even better than they look, because iPhone sales and income are spread forward over 2 years due to accounting rules. (See our comments on CNBC here)
- NINTENDO: on August 29, 2008 Nintendo revised the forecast for full-year net income upward by +26.2% (See our comments on CNBC here)
- SONY: in contrast, on October 23, 2008, SONY said that full-year net income (for the financial year ending March 2009) is expected to be 37.5% lower than previously predicted (see our comments on SONY's 1Q results here on CNBC)
Lets look at today's market caps:
- APPLE market cap = US$ 85.6 Billion (about 4 x SONY)
- NINTENDO market cap = US$ 37.2 Billion (about 2 x SONY)
- SONY market cap = US$ 19.9 Billion
Why this dramatic difference? We believe its focus. Apple and Nintendo are companies with clear focus. Lets look at the details below:
In terms of sales:
- SONY = 3 x APPLE
- SONY = 4 x NINTENDO
In terms of annual operating income:
- APPLE = 3 x SONY
- NINTENDO = 3 x SONY
In terms of operating margin:
- APPLE = 9 x SONY
- NINTENDO = 15 x SONY
- APPLE: Wednesday October 22 APPLE announced spectacular full-year results with a year-on-year net income increase of 38%. The results are even better than they look, because iPhone sales and income are spread forward over 2 years due to accounting rules. (See our comments on CNBC here)
- NINTENDO: on August 29, 2008 Nintendo revised the forecast for full-year net income upward by +26.2% (See our comments on CNBC here)
- SONY: in contrast, on October 23, 2008, SONY said that full-year net income (for the financial year ending March 2009) is expected to be 37.5% lower than previously predicted (see our comments on SONY's 1Q results here on CNBC)
Lets look at today's market caps:
- APPLE market cap = US$ 85.6 Billion (about 4 x SONY)
- NINTENDO market cap = US$ 37.2 Billion (about 2 x SONY)
- SONY market cap = US$ 19.9 Billion
Why this dramatic difference? We believe its focus. Apple and Nintendo are companies with clear focus. Lets look at the details below:
In terms of sales:
- SONY = 3 x APPLE
- SONY = 4 x NINTENDO
In terms of annual operating income:
- APPLE = 3 x SONY
- NINTENDO = 3 x SONY
In terms of operating margin:
- APPLE = 9 x SONY
- NINTENDO = 15 x SONY
