Sony Corp. (SNE - Snapshot Report) reported first-quarter fiscal 2015 GAAP earnings per share of ¥70.36 (58 cents), which more than doubled from ¥22.94 in prior-year quarter.

Robust results were primarily attributable to improved operational performance across the major segments. Especially, high gain from sales of image sensors units remains the winner. Encouragingly, it is this leading electronics manufacturer’s strongest earnings since 2007.

Inside the Headlines

For the quarter, Sony’s sales and operating revenue were flat year over year at ¥1,808.1 billion ($14,820 million). Strong performance of the Devices segment and favorable foreign exchange impact collectively offset the weak Mobile Communications and Home Entertainment & Sound segments. On the other hand, net sales dipped 2.4% year over year to ¥1,503.3 billion ($12,322 million).

Nevertheless, operating income jumped 38.8% year over year to ¥96.9 billion ($794 million) fueled by rise in income from the Music segment and revenues from the Devices segment. Additionally, income before income taxes rocketed 102.9% year over year to ¥138.7 billion ($1,137 million).

During the quarter, Sony’s realigned its business, with modification primarily involving repositioning of operations related to its All Other segment. Particularly, the All Other segment’s Japanese disc manufacturing business and So-net Corporation and its subsidiaries operations, respectively, was registered in the Music segment and the MC segment, respectively.

Segmental Revenues

Sales and operating revenue of the Game & Network Services segment increased 12.1% year over year to ¥288.6 billion ($2,365 million) mainly aided by robust sales of PlayStation 4 software and its peripheral device units along with favorable foreign exchange rates impact.

Additionally, Devices’ sales and operating revenue zoomed 35.1% year over year to ¥237.9 billion ($1,950 million) benefiting from strong sales of image sensors for mobile products and camera modules.

Moreover, Imaging Products & Solutions segment exhibited a 3.5% year-over-year increase in sales and operating revenue to ¥170.4 billion ($1,396 billion), driven by exchange rates gains as well as product mix enhancement of digital cameras.

Also, Music segment experienced an 8.5% rise in sales and operating revenues to ¥130.2 billion ($1,067 million) on a year-over-year basis. This was impacted by depreciation of the yen against the U.S. dollar.

However, Mobile Communications’ sales and operating revenue tumbled 16.3% year on year to ¥280.5 billion ($2,299 million) due to strategic trim down of smartphone unit sales to boost profitability. Also, Home Entertainment & Sound segment witnessed a 13.8% year-on-year decline in sales and operating revenues to ¥253.1 billion ($2,075 million). Sharp decrease in LCD televisions and home audio and video unit sales were the headwinds. Alongside, Pictures Segment’s sales and operating revenue slipped 11.9% year over year to ¥171.5 billion ($1,406 million) hurt by very low sales of Motion Pictures resulting in decline in theatrical and television licensing revenues.

On the other hand, Financial services revenue rose 13.1% year on year to ¥279.4 billion ($2,290 million) driven by good performance of Sony Life.

Liquidity & Cash Flow

As of Jun 30, 2015, Sony’s cash and cash equivalents stood at ¥628.1 million ($5,148 million), as against ¥949,4 million as of Mar 31, 2015. Conversely, long-term debt was ¥670.8 million ($5,498 million), versus ¥712.1 million as of Mar 31, 2015.

As of Jun 30, 2015, net cash used in operating activities came in at ¥154.3 million ($1,265 million), as compared to net cash provided by operating activities of ¥66.2 million in the prior-year quarter. 

Fiscal 2016 Guidance

Sony has reaffirmed its outlook for fiscal 2016. The company continues to project net income to be ¥140 billion, sales and operating revenue to be ¥7,900 billion and operating income to be ¥320 billion. The company assumes the average foreign exchange currency rates for the remainder of the fiscal year to be about ¥125 as against one U.S. dollar.

In Conclusion

We are impressed with Sony’s improved quarterly performance, following a series of dismal earnings. Going forward, we believe deals like establishment of the logistics joint venture with MITSUI-SOKO HOLDINGS Co., Ltd will further benefit the company’s financials. Sony projects to reap operating income of about ¥13 billion in the quarter ending Mar 31, 2016 from this.

Also, Sony penned a deal with JP Morgan Securities Japan Co., Ltd. – a subsidiary of JPMorgan Chase & Co. (JPM - Analyst Report) – to sell about 17.2 million shares of Olympus Corporation in the quarter. We believe such initiatives will boost the future earnings of this Zacks Rank #5 (Strong Sell) stock.

A couple of better-ranked stocks in the electronic equipment industry include Skullcandy, Inc. (SKUL - Snapshot Report) and Dolby Laboratories, Inc. (DLB -Snapshot Report). Both stocks carry a Zacks Rank #2 (Buy).