Is Sony Finally Turning Around?

Sony Corp. (NYSE: SNE) has had a tough time over the past decade. Areas in which it dominated the market, like television and laptop computing, have all but dried up. The company has had to undergo some serious structural realignment in order to stay relevant. After a decade-long run of losing money, however, and in the wake of the restructuring, the tech giant has started to report a positive bottom line.

In each of the past two quarters, fiscal first quarter 2015 ended June 30 and fiscal second quarter 2015 ended September 30, Sony recorded a profit, and analysts expect a continuation of this trend ahead of next earnings results, set for release at market close, January 29. What’s behind this turnaround, and is Sony set for a long-term comeback?

It does look that way, but it won’t be the Sony of the past. Consumers care less and less about who makes many of the electronics they buy, as spaces such as laptops and computers become software driven rather than hardware. The Sony brand meant a lot more to consumers in these areas a decade ago than it does today. This is the root of the company’s struggles in its once prestigious Vaio model laptop — average consumers aren’t willing to pay a premium for a Vaio when they can get the same operating system and performance on a cheaper brand, or increasingly on a tablet.

So where is the company’s growth going to come from? Sony’s growth going forward will hinge on two flagship segments: gaming and imaging. Of course, the battery and semiconductor business will plod along, and buoyed by Chief Financial Officer Kenichiro Yoshida’s aggressive cost cutting, might even generate a positive bottom line, but it is gaming and imaging that are steering the ship.

The company logged $1.5 billion in sales in its imaging operations last quarter, with operating income of $215 million — a 29% gain on the same period a year earlier. It sells its lenses to some of the biggest mobile device makers in the world, including Apple, in a deal that reportedly sees the company make $20 on every iPhone sold. Its image sensor technology accounted for 40% of global camera sensors in 2014, and while data is not yet available for 2015, the growth in operating income suggests this domination likely has expanded over the past 12 months.

Its gaming sector sold $3 billion worth of product last quarter and turned a $199 million profit, figures up 17% and 9%, respectively, on the same period a year earlier. The upcoming release looks set to mirror this trend, with analysts suggesting sales of close to 6 million PS4 units across the holiday period. At current prices that puts console revenue alone at more than $2 billion.

To answer the question then, yes, Sony is making a comeback, but it has had a makeover and is no longer the same company.