The Consumer Electronics sector experienced positive results in Q4 2015, consistent with previous fourth quarters. The sector’s revenue grew by 21% quarter on quarter, but declined 4% year on year. Net income also showed positive growth sequentially, with three out of the five companies showing positive net income. Year-on-year net income was relatively flat with two companies—Apple Inc and Sony Corp—showing growth. Toshiba reported the sharpest decline in net income with net losses of US$4.3 billion this quarter. The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 23.09% to 13.60%, as well as issues with cost controls.
In the US, the Consumer electronics (CE) sector is improving their recycling initiatives. Consumer electronics are the fastest declining portion of the municipal waste stream. Recycling of CE products has increased 27% annually while the reduction of CE products going to landfills fell 17% annually. The Internet of Things, which is at the forefront of smart energy use and management and renewable energy sources are leading the way to decrease e-waste.1
The Consumer Electronics Association Index of Consumer Expectations (ICE), which measures US consumer sentiment about the broader economy, decreased 3.9 points to 168.7 in December from November 2015, but still there is some expectation for tech spending to pick up as the economy and inventory situation improves.
The rapid adoption of the Internet of Things (IoT) in the consumer electronics industry is expected to drive retail revenue in the US consumer technology industry to US$287 billion in 2016. The growth of the consumer technology industry’s revenue is also driven by innovations such as wearables, virtual reality, robotics and drones. The exponential growth of the IoT, speed of innovation and more affordable and accessible products are driving factors.1
Apple Inc posted record quarterly revenue of US$75.9 billion and quarterly net income of US$18.4 billion. This was a 47.3% increase in revenue quarter on quarter, but flat year on year. Fourth quarter net income of US$18.4 billion led to 65.1% growth sequentially. Year on year it was a 1.9% increase. The sharp sequential growth was due to the seasonal nature of demand and the holiday season. International sales accounted for 66% of the quarter’s revenue. The ‘services’ and ‘other products’ businesses increased by 19% and 43% sequentially and 26% and 62% year over year. Apple Inc generated operating cash flow of US$27.5 billion during the quarter. Apple noted that forex had a 600 bps impact on this quarters’ revenue growth. Despite the economic turbulence in China, Apple remains bullish and predicts rising 4G penetration will continue increasing iPhone sales. A staggering 50% of Chinese iPhone sales are said to be to first-time buyers.
Sony Corp reported 36% growth in net income compared to the last year. Operating income increased to US$1,685 million. This increase was primarily due to improvements in the results of All Other, the Pictures segment, the MC segment and the G&NS segment. In the same quarter of the previous fiscal year, a write-down of PlayStation®Vita (“PS Vita”) and PlayStation®TV (“PS TV”) components in the G&NS segment was recorded lowering Q4 2014 net income.
1Consumer Technology Association, Dec 2015