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Apple, Huawei Seen Leading Dual-Cam Upgrade Cycle, New 3D Apps Key

Apple ( AAPL ) and China’s Huawei could drive adoption of dual cameras in smartphones, says a new Morgan Stanley research report that takes a look at potential upside for optical component makers in Asia if dual-cam becomes mainstream by 2018. Observers speculate that Apple’s iPhone 7 could feature dual-cam capabilities. Morgan Stanley says that Apple and Huawei will likely be the main OEMs to adopt dual-cam technology this year, because of their R&D capabilities, followed by other smartphone makers. The technical benefits of dual cameras in smartphones are many, including much improved resolution, especially in low light, and increased range and depth analysis. “We think the dual-cam rally is more about when than if,” Morgan Stanley analyst Jasmine Lu said in the report.  “Apple will likely account for 42% (or more) of total global dual-cam volume from 2017.” HTC first introduced the feature two years ago, but the user experience was poor, says Morgan Stanley. In December 2014, Huawei took the wraps off the Honor 6 Plus smartphone, which had a dual-cam design. LG Electronics was the first Korean smartphone maker to feature a dual-lens camera module in its smartphone, the V10, released in Q4 2015. At last week’s  Mobile World Congress , it unveiled the G5, which features a rear dual-lens camera module. Morgan Stanley says that component makers Largan, Alps and Sony ( SNE ) should gain when dual-cam becomes mainstream. New apps will be key. “We believe dual-cam not only helps narrow the image quality gap with SLR cameras but also allows developers to design new killer apps by leveraging in-depth analysis/mapping for 3D objects,” Lu wrote. “We expect dual-cam to trigger a multiyear upgrade cycle for the optical industry.”

Best Buy Posts Better-Than-Expected Q4, Ups Dividends

Consumer electronics retailer Best Bu y ( BBY ) reported better-than-expected fiscal fourth-quarter results early Thursday, but it continues to face declining sales overall and in key categories, and its guidance missed Wall Street estimates. Best Buy stock was up 2%, above 32, in afternoon trading on the stock market today , as investors cheered the announcement of a special cash dividend and higher quarterly dividend. Best Buy said it will pay a special dividend of 45 cents a share, or about $145 million, related to the net after-tax proceeds of certain legal settlements and asset disposals. The retailer also boosted its regular quarterly dividend by 22% to 28 cents a share. Plus, Best Buy announced a new $1 billion share-repurchase plan expected to be completed over the next two years. Best Buy CEO Hubert Joly said the company aims to be a “premium dividend payer,” with a non-GAAP dividend payout ratio between 35% to 45%. In its fourth quarter ended Jan. 30, the Richfield, Minn.-based company earned $1.53 a share excluding items on sales of $13.62 billion. Analysts polled by Thomson Reuters expected Best Buy to earn $1.39 a share on sales of $13.61 billion. On a year-over-year basis, EPS rose 3% and sales fell 4%. Under generally accepted accounting principles (GAAP), Best Buy’s earnings per share fell 5% to $1.39. Best Buy’s same-store sales slipped 1.8% in Q4. But the company’s e-commerce sales jumped  nearly 14% to $1.95 billion, accounting for 15.6% of total U.S. revenue. In its online sales segment, Best Buy competes with industry powerhouse Amazon.com ( AMZN ). Growth in health and wearables, home theater and major appliances was more than offset by “significant declines” in mobile phones, tablets and digital cameras, Best Buy said in a press release . For the current quarter, Best Buy expects to earn 31 to 35 cents a share, vs. 37 cents a year earlier. The midpoint of 33 cents a share would represent a year-over-year decline of 11%. It sees sales falling 3% to $8.3 billion based on the midpoint of guidance. Best Buy Sees Growth Later In Year Analysts polled by Thomson Reuters were modeling for Best Buy to earn 38 cents a share on sales of $8.4 billion. Best Buy Chief Financial Officer Sharon McCollam said the retailer expects to see sales decline in the first half of the fiscal year, followed by growth in the back half. Best Buy is targeting flat domestic revenue for the full year. Appliances, home theater and connected home products are likely to be the top growth categories, she said. Best Buy said it will counter soft overall-sales growth in consumer electronics by focusing on market share gains and by making operational improvements to boost profits. On a conference call with analysts, Joly spoke about the product categories that will drive Best Buy sales. Household appliances, connected home products and large-screen ultra HD or 4K televisions are bright spots, he said. Virtual reality headsets are a new category that Best Buy is “very excited about,” Joly said. “This is an interesting category,” he said. “It will be small this year. It may help in the computing category with (sales of) higher-end computers because you’re going to need that computing power. But from a financial perspective, it’s going to be limited.” Three VR platforms are coming to market this year: Facebook ’s ( FB ) Oculus Rift, HTC Vive and Sony ’s ( SNE ) PlayStation VR.

Game Console Cycle Looks Bright For Activision, EA

The current video-game-console cycle still has room to run, providing upside for top game publishers like Activision Blizzard ( ATVI ) and Electronic Arts ( EA ), Piper Jaffray analyst Michael Olson said Wednesday. Olson reiterated his overweight ratings on Activision and EA stock in separate reports. He has a price target of 39 on Activision and 87 on EA. In afternoon trading on the stock market today , Activision was up over 1% to above 31 and EA was up 1.5% to above 62. “The console cycle is in its third year and investors are beginning to ask if we are nearing the ‘peak’ of this cycle,” Olson said. “While some that own these stocks for the ‘cycle trade’ may be selling, we believe there are arguments to be made that consistent growth will come over the next several years and an ongoing mix shift towards digital that will drive margins higher.” Current-generation console uptake rates have outpaced the previous generation, but the installed base has “significant room to grow,” he said. The current-generation consoles are Sony ‘s ( SNE ) PlayStation 4, Microsoft ‘s ( MSFT ) Xbox One and Nintendo ‘s ( NTDOY ) Wii U. “While the uptake rate of hardware in the current console cycle has been tracking 40% to 50% faster than the prior cycle, we believe growth of the installed base is far from over,” Olson said. “Specifically, at this point in the cycle about 40% as many consoles (Xbox One & PS4) have shipped compared to life-to-date shipments of prior-gen consoles (Xbox 360 & PS3).” Sales of previous-generation consoles (Xbox 360 and PS3) reached about 162 million units, while current-generation consoles (Xbox One and PS4) have sold about 60 million so far, he said. RELATED: Activision Blizzard Whiffs On Q4 EPS, Sales; Stock Sinks Electronic Arts Falls On Mixed Q3, Weak Guidance .