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Forums - Sony Discussion - Sony to sell $1.9bn of conv bonds, stock down 10% in early trading.

Akvod on 18 November 2012
Dodece said:
Akvod said:
Dodece said:
@Akvod

That would be like taking on Satan as a spiritual adviser. At best you would get their side of the story, and at worst all you would get is spin. Neither of which would likely be the truth. After all do you know anybody who would say on the record that they have a gut feeling that their company is going to implode in a year. Even if you think that you are going to be unemployed in a year. You don't just come out and say it. Unless your looking to move it forward by getting yourself fired.

That said your commentary was basically a double negative, or was it a triple or quadruple negative. Firstly you say your not a expert, and then offer up your expert opinion. How can you say that Sony can make a case if you don't know the facts. Secondly you once again wave your credentials of not being a expert, and then offer up a expert opinion that I am not a expert. How would you know that seeing as your are not a expert.

Okay fun time is over. Any lay person is qualified to render a informed verdict. No special knowledge is required. Sony is a publicly traded company, and as such we have access to their financial statements, their contracts, their copyrights, their patents, and even their tax returns. So it isn't like there is a grand mystery here. There is really a good amount of evidence to work with. Juries have sentenced people to death with less information.

If you feel your inadequately informed that is fine, and it is good of you to admit. However that doesn't mean that others in this community are equally uninformed. Many here have spent years getting well versed with how Sony has operated, and the current disposition of the company. In a nutshell a lot of us are far from being babes in the woods.


My point is that Sony has a potential future cash inflow. That's all my original point was, and Sony can make an argument as to why people should invest in them. And people can have different conclusions.

But to judge whether or not they have a case, you're going to need a good guess as to what their margins are going to be, sales (which will be based on projected market share for an entire new line of consoles x size of the next gen console market), other sources of revenue, their cost of capital, etc.

And that's pretty fucking hard. Especially for a brand new console gen. where you're essentially starting from scratch, and there can be so much volatility. And as much as people make fun of analysts like Pachter, doing projections are complex. And that's ignoring the fact that Sony is a conglomerate with multiple businesses that may be doing well or unwell.

So I just get irritated when I see people like you writing some kind of wordy liberal arts essay ("That would be like taking on Satan as a spiritual adviser.", really?)

Give me some numbers. Give me some projected numbers. Give me some details, or at least a back of the hand calculation and then I'll listen. Otherwise, I'm going to think you're just talking out of your ass.

1. Anyone can make a argument, but not everyone should be taken seriously. The problem is that Sony has almost no credibility. They consistently over estimate their performance. Even when they project a loss, and that isn't ever a exaggeration on my part. I honestly can't recall if Sony has even met, or beaten any of thier last twenty quarterly forecasts. I know for a fact they haven't met their last five yearly forecasts. By the way potential is a fairly vague term.

2. You are actually severely overstating your case. While it is true you need a working knowledge of the subject. You don't need a Microscope to parse out the trends, or to plug in basic variables. For examples sake you don't need to know the location of every single lightning bolt to know where a storm is likely to hit, or about how much rain it is going to deliver to the ground. Yeah sure every lightning strike has a effect on the storm as a whole, and their cumulative effect can be significant, but it doesn't change the fundamental fact that the Earth rotates, and storms have to obey that rule of motion.

3. Has it occurred to you that Pachter just isn't very good at his job. That his predictions often fail not, because the situation is chaotic, but because he hasn't considered the correct data. There isn't necessarily a good substitute for instincts when it comes to human behavior. Hell there isn't a good substitute for real dispassionate observation. I suspect he is guilty on both accounts. Don't assume what the media assumes. Which is that he is eminently qualified to deliver any kind of rigorous verdict on anything. There are those on these forums that routinely outperform him.

3a. As for Sony being a conglomerate. You do understand that Sony's almost obsessive insistence on reinvigorating their core business is actually defeating that well crafted argument you think you just made. Sony is routinely selling off divisions and holdings that are actually profitable. That is in fact how they are able to sell them. That said the divisions routinely losing money are not offset by the few areas where Sony is actually making money, and those divisions that routinely lose money. Lose Sony a lot of money. Sony is funneling money into money pits. It doesn't take calculus to see where that is going to lead.

4. Well thank you I think. I try to write in a way that is both amusing and informative. There isn't anything wrong with good craftsmanship. Look you have to understand something. Your coming into a conversation that has been going on for five years or more. A lot of us here have been digesting the information as it comes in, and disected just about everything we have gotten our hands on. A lot of us have a real good working knowledge. That said if you want me to go to the trouble of compiling a detailed synopsis that will take me all of twenty hours to create. I really want to know a few things.

Are you genuinely interested in understanding these things? Would you be willing to contribute to a lengthy discussion? Do you feel you would have anything substantial to contribute? Look I would be more then happy to do this, but if my history on these forums has taught me anything it is this. The more time you put into something the less you get out. Flamebait can generate twenty page threads, and serious analytical threads can drop off the front page with all of half a dozen replies. So I guess I am asking you if your just going to waste my time with this, because it is a discussion that I take seriously. If so it probably won't be soon on my end. I will need a couple free days when I have nothing better to do, and that could be a few weeks down the road.

1. You're not a financial analyst. Have you even taken a finance class? As of right now, you have absolutely no credibility.

2. No, there's a reason why financial analyst get paid a lot and are highly educated. And again, analysts get access with management. They also happen to be industry experts with years of experience. Investing isn't as simple as saying "Sony's doomed".

3. Be realistic. He would have been fired if he was bad at his job. The financial industry isn't like manufacturing, they're way less prone to just hold onto somebody for no reason.

4. You write in a really obnoxious and longwinded style. I have no idea why you're doing it, but it doesn't make you sound smart and it doesn't make you sound like a good writer.

To be honest, I haven't got the clue what your point was in your original post to me. Of course past performance is a factor, but did I say it wasn't?

 

Please just don't talk to me. I'm not interested in having a conversation with you.



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Dodece on 18 November 2012
Akvod said:
Dodece said:
Akvod said:
Dodece said:
@Akvod

That would be like taking on Satan as a spiritual adviser. At best you would get their side of the story, and at worst all you would get is spin. Neither of which would likely be the truth. After all do you know anybody who would say on the record that they have a gut feeling that their company is going to implode in a year. Even if you think that you are going to be unemployed in a year. You don't just come out and say it. Unless your looking to move it forward by getting yourself fired.

That said your commentary was basically a double negative, or was it a triple or quadruple negative. Firstly you say your not a expert, and then offer up your expert opinion. How can you say that Sony can make a case if you don't know the facts. Secondly you once again wave your credentials of not being a expert, and then offer up a expert opinion that I am not a expert. How would you know that seeing as your are not a expert.

Okay fun time is over. Any lay person is qualified to render a informed verdict. No special knowledge is required. Sony is a publicly traded company, and as such we have access to their financial statements, their contracts, their copyrights, their patents, and even their tax returns. So it isn't like there is a grand mystery here. There is really a good amount of evidence to work with. Juries have sentenced people to death with less information.

If you feel your inadequately informed that is fine, and it is good of you to admit. However that doesn't mean that others in this community are equally uninformed. Many here have spent years getting well versed with how Sony has operated, and the current disposition of the company. In a nutshell a lot of us are far from being babes in the woods.


My point is that Sony has a potential future cash inflow. That's all my original point was, and Sony can make an argument as to why people should invest in them. And people can have different conclusions.

But to judge whether or not they have a case, you're going to need a good guess as to what their margins are going to be, sales (which will be based on projected market share for an entire new line of consoles x size of the next gen console market), other sources of revenue, their cost of capital, etc.

And that's pretty fucking hard. Especially for a brand new console gen. where you're essentially starting from scratch, and there can be so much volatility. And as much as people make fun of analysts like Pachter, doing projections are complex. And that's ignoring the fact that Sony is a conglomerate with multiple businesses that may be doing well or unwell.

So I just get irritated when I see people like you writing some kind of wordy liberal arts essay ("That would be like taking on Satan as a spiritual adviser.", really?)

Give me some numbers. Give me some projected numbers. Give me some details, or at least a back of the hand calculation and then I'll listen. Otherwise, I'm going to think you're just talking out of your ass.

1. Anyone can make a argument, but not everyone should be taken seriously. The problem is that Sony has almost no credibility. They consistently over estimate their performance. Even when they project a loss, and that isn't ever a exaggeration on my part. I honestly can't recall if Sony has even met, or beaten any of thier last twenty quarterly forecasts. I know for a fact they haven't met their last five yearly forecasts. By the way potential is a fairly vague term.

2. You are actually severely overstating your case. While it is true you need a working knowledge of the subject. You don't need a Microscope to parse out the trends, or to plug in basic variables. For examples sake you don't need to know the location of every single lightning bolt to know where a storm is likely to hit, or about how much rain it is going to deliver to the ground. Yeah sure every lightning strike has a effect on the storm as a whole, and their cumulative effect can be significant, but it doesn't change the fundamental fact that the Earth rotates, and storms have to obey that rule of motion.

3. Has it occurred to you that Pachter just isn't very good at his job. That his predictions often fail not, because the situation is chaotic, but because he hasn't considered the correct data. There isn't necessarily a good substitute for instincts when it comes to human behavior. Hell there isn't a good substitute for real dispassionate observation. I suspect he is guilty on both accounts. Don't assume what the media assumes. Which is that he is eminently qualified to deliver any kind of rigorous verdict on anything. There are those on these forums that routinely outperform him.

3a. As for Sony being a conglomerate. You do understand that Sony's almost obsessive insistence on reinvigorating their core business is actually defeating that well crafted argument you think you just made. Sony is routinely selling off divisions and holdings that are actually profitable. That is in fact how they are able to sell them. That said the divisions routinely losing money are not offset by the few areas where Sony is actually making money, and those divisions that routinely lose money. Lose Sony a lot of money. Sony is funneling money into money pits. It doesn't take calculus to see where that is going to lead.

4. Well thank you I think. I try to write in a way that is both amusing and informative. There isn't anything wrong with good craftsmanship. Look you have to understand something. Your coming into a conversation that has been going on for five years or more. A lot of us here have been digesting the information as it comes in, and disected just about everything we have gotten our hands on. A lot of us have a real good working knowledge. That said if you want me to go to the trouble of compiling a detailed synopsis that will take me all of twenty hours to create. I really want to know a few things.

Are you genuinely interested in understanding these things? Would you be willing to contribute to a lengthy discussion? Do you feel you would have anything substantial to contribute? Look I would be more then happy to do this, but if my history on these forums has taught me anything it is this. The more time you put into something the less you get out. Flamebait can generate twenty page threads, and serious analytical threads can drop off the front page with all of half a dozen replies. So I guess I am asking you if your just going to waste my time with this, because it is a discussion that I take seriously. If so it probably won't be soon on my end. I will need a couple free days when I have nothing better to do, and that could be a few weeks down the road.

1. You're not a financial analyst. Have you even taken a finance class? As of right now, you have absolutely no credibility.

2. No, there's a reason why financial analyst get paid a lot and are highly educated. And again, analysts get access with management. They also happen to be industry experts with years of experience. Investing isn't as simple as saying "Sony's doomed".

3. Be realistic. He would have been fired if he was bad at his job. The financial industry isn't like manufacturing, they're way less prone to just hold onto somebody for no reason.

4. You write in a really obnoxious and longwinded style. I have no idea why you're doing it, but it doesn't make you sound smart and it doesn't make you sound like a good writer.

To be honest, I haven't got the clue what your point was in your original post to me. Of course past performance is a factor, but did I say it wasn't?

 

Please just don't talk to me. I'm not interested in having a conversation with you.

1. The Wright brothers weren't engineers, and didn't take classes in engineering. Hell they didn't even graduate from high school. Under your logic they must not have invented the airplane, because they didn't have the credentials to do so. Well there goes your first theory shot to shit.

2. I suppose that whole financial crash I heard about over four years ago was just some silly little rumor. There goes your second theory down in flames.

3. Okay you got this one ass backwards. You can bullshit your way through finance. Don't believe me go ask any of the people that Bernie Madoff swindled. Manufacturing is a purely result oriented industry. Either you meet your quotas or you do not. If you don't you can expect to get fired no matter the excuses you make up on the spot. Your third theory just implodes under the weight of every day logic.

4. It has been said that opinions are like assholes in that everyone has one. Apparently I am smart. Well smarter then you anyway, because I am dominating you.

5. No you just choose to ignore it, and you know what it is everyday logic your ignoring. Would you seriously expect better of any serial perpetrator. Five years of continual fuck ups. Doesn't mean you give them the benefit of the doubt.

6. We are having a conversation. What is this grade school. I mean if you didn't want to have a conversation. You just shouldn't have responded. Well if that is the way you want to have it. I guess I get the last word, and that must mean I won.



http://live.xbox.com/member/Dodece

Augen on 18 November 2012
Wlakiz said:
... if you guys have taken out a mortgage before you would understand the concept.

Lets say you borrow $300k from the bank to buy a home . In the bank's perspective, they are happy because they get free money from charging you interest rate, and you are happy yourself because you get to live in a new house or w/e. With a stroke of luck, you win a lottery and you get $70k. You can either put that money into the first mortgage and cut your amortization period by 10 years or you can do something smarter and use that $70k to put in a second down payment and get a second mortgage. Whoa whoa, wait you say, you're just going into deeper debt, because you have two mortgage to pay now! Yep, that's true but you see when I get a new home I can rent it out and use the rent to pay the mortgage, so basically my asset doubled and I pay the same amount as before.


Like many financial decisions there are not necessarily right and wrong ways to go, but to understand the markets and what you are getting yourself in to.  In your example the critical aspect is stating "rent out the second home" as if it is a formality.  Obviously markets vary region to region, but unless you're confident can have reliable tennants this proposition can be very risky.  I knew someone who did exactly this, and it worked great for a few years, and then 2008 happened and suddenly they had an asset they could not offload unless they were willing to take a heavy loss and no income to pay the second mortage.  It sat empty for months until they slashed rental rate by a third just to get bodies in there.  My point?  What you are suggesting can work out great, but it hinges on variables that are not set in stone and could potentially ruin you.  

My advice?  What is the rate on your mortage and do you think you can invest your money at a better rate of return than that?  If so, go for it, post I quoted is possible avenue. If not, do the conservative thing and give yourself breathing room by paying down your mortage.  

I'm not arguing, just giving greater context I hope to your valid point.

On Sony...yeah I am not touching that stock anytime soon.



Wlakiz on 20 November 2012
Augen said:
Wlakiz said:
... if you guys have taken out a mortgage before you would understand the concept.

Lets say you borrow $300k from the bank to buy a home . In the bank's perspective, they are happy because they get free money from charging you interest rate, and you are happy yourself because you get to live in a new house or w/e. With a stroke of luck, you win a lottery and you get $70k. You can either put that money into the first mortgage and cut your amortization period by 10 years or you can do something smarter and use that $70k to put in a second down payment and get a second mortgage. Whoa whoa, wait you say, you're just going into deeper debt, because you have two mortgage to pay now! Yep, that's true but you see when I get a new home I can rent it out and use the rent to pay the mortgage, so basically my asset doubled and I pay the same amount as before.


Like many financial decisions there are not necessarily right and wrong ways to go, but to understand the markets and what you are getting yourself in to.  In your example the critical aspect is stating "rent out the second home" as if it is a formality.  Obviously markets vary region to region, but unless you're confident can have reliable tennants this proposition can be very risky.  I knew someone who did exactly this, and it worked great for a few years, and then 2008 happened and suddenly they had an asset they could not offload unless they were willing to take a heavy loss and no income to pay the second mortage.  It sat empty for months until they slashed rental rate by a third just to get bodies in there.  My point?  What you are suggesting can work out great, but it hinges on variables that are not set in stone and could potentially ruin you.  

My advice?  What is the rate on your mortage and do you think you can invest your money at a better rate of return than that?  If so, go for it, post I quoted is possible avenue. If not, do the conservative thing and give yourself breathing room by paying down your mortage.  

I'm not arguing, just giving greater context I hope to your valid point.

On Sony...yeah I am not touching that stock anytime soon.

Of course there are risks to investments, if there are no risks then everyone would be fighting to invest on it. But my point was to address the mentality that once you're in debt you should not invest/buy things. I don't agree with it. The banks and creditors won't love you more because you pay off their debt tomorrow; in fact, they are less likely to invest on your business if your prioritize paying off your debt instead of growing your business. Their only concern is your ability to pay them back through valuation or revenue, nothing more.

As for Sony stocks. I bought a bunch around $16, I am losing about $300-400 ish but you know what? The loss is probably less than the people who bought apple around 600 or 700. The lesson of the day is Bears make money, Bulls make money but Pigs get slaugtered. Invest on market trends and not on greed. If I have a bit more cash in hand, I wouldn't mind investing a bit more in Sony and buying a bit of those convertible bonds. They are making progress in cutting their losses and their diverse investments gives them a bit of resilence to market shifts.

In any case, if you're looking for places to put your money, investing in energy and resource is always a better bet than investing in technology even on 'winners' like Apple and Google.



SnakeDrake on 20 November 2012

You see Sony cares for its fans so they borrowed $2 bill to finance The Last Guardian development



 

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Dodece on 20 November 2012

@Wlakiz

Your viewpoint seems to counter indicate investing in Sony. Seeing as they are selling off non core businesses even if they are profitable. To funnel more resources into technology. They are effectively reversing their diversification, and upping their bid on riskier investments. I am curious as to how you justify your investment given what their stated goals are as a company. I can understand betting on a diverse portfolio seeing as it is safe, but Sony seems to be just plain shredding their portfolio. That seems to leave them more exposed to market volatility.

Which brings us back to the bonds. I agree with your analysis of debt in a general sense, but are we talking about funding expansion, or covering operating expenses. I agree that expansion can generate returns on investment that can exceed the interest owed. I just don't see many of us believing that the majority of this is actually about Sony wanting to finance expansions. Sony is actually on the whole shrinking. The assets that Sony has sold off should be generating enough capitol to cover reinvestment. Unless the company is spending far more money then it is making.

Borrowing to grow can be a good thing, but borrowing to cover day to day expenses can be a bad thing. Terribly so when the global economy is entering a slowdown. It might become harder to borrow money, and if Sony ends up stuck. It could end up having to substitute its scalpel for a chainsaw. Anyway I am interested in how you are reconciling these issues in your mind.



http://live.xbox.com/member/Dodece

Augen on 20 November 2012
Wlakiz said:

Of course there are risks to investments, if there are no risks then everyone would be fighting to invest on it. But my point was to address the mentality that once you're in debt you should not invest/buy things. I don't agree with it. The banks and creditors won't love you more because you pay off their debt tomorrow; in fact, they are less likely to invest on your business if your prioritize paying off your debt instead of growing your business. Their only concern is your ability to pay them back through valuation or revenue, nothing more.

As for Sony stocks. I bought a bunch around $16, I am losing about $300-400 ish but you know what? The loss is probably less than the people who bought apple around 600 or 700. The lesson of the day is Bears make money, Bulls make money but Pigs get slaugtered. Invest on market trends and not on greed. If I have a bit more cash in hand, I wouldn't mind investing a bit more in Sony and buying a bit of those convertible bonds. They are making progress in cutting their losses and their diverse investments gives them a bit of resilence to market shifts.

In any case, if you're looking for places to put your money, investing in energy and resource is always a better bet than investing in technology even on 'winners' like Apple and Google.

I think you have to know yourself, and from what I have seen most people who get into debt did so in part because they were not good with their money or understanding the concepts you are stating.  Some people don't invest because, frankly, they don't have a clue where to start.

Likely in your example I would invest the 70K because I could expect an annual yield between 7-11% (or 4.9k to 7.7k) conservatively which is more than paying down my mortage would benefit me in that time and each year the gap would only widen.  So, I agree it works for those that see how money works and making money off money.  

Let us look at your Sony investment.

If you bought 100 shares (my minimum order) right now you'd be down $600 dollars on principle.  If you paid $16/share that means purchased roughly in April/May range so you did recieve a $28 dividend between then and now. So, down 36%.

Market trends for 2012 show DOW up 3%, Nasdaq up 10%, and S&P up 8%.  It has been a market where one could reap some nice gains recently.

I would be curious a year from now what you'd expect Sony to be at?



Wlakiz on 21 November 2012
Dodece said:
@Wlakiz

Your viewpoint seems to counter indicate investing in Sony. Seeing as they are selling off non core businesses even if they are profitable. To funnel more resources into technology. They are effectively reversing their diversification, and upping their bid on riskier investments. I am curious as to how you justify your investment given what their stated goals are as a company. I can understand betting on a diverse portfolio seeing as it is safe, but Sony seems to be just plain shredding their portfolio. That seems to leave them more exposed to market volatility.

Which brings us back to the bonds. I agree with your analysis of debt in a general sense, but are we talking about funding expansion, or covering operating expenses. I agree that expansion can generate returns on investment that can exceed the interest owed. I just don't see many of us believing that the majority of this is actually about Sony wanting to finance expansions. Sony is actually on the whole shrinking. The assets that Sony has sold off should be generating enough capitol to cover reinvestment. Unless the company is spending far more money then it is making.

Borrowing to grow can be a good thing, but borrowing to cover day to day expenses can be a bad thing. Terribly so when the global economy is entering a slowdown. It might become harder to borrow money, and if Sony ends up stuck. It could end up having to substitute its scalpel for a chainsaw. Anyway I am interested in how you are reconciling these issues in your mind.

In matters of company direction, Sony's root is a technology company afterall, so of course they would like to continue funneling resources to this sector but technology doesn't necessarily mean T.Vs, Playstation or cell phone. Unlike Blackberry and Nokia whom can only pray their next phone can get them back to the game against google and apple, Sony with their diversity can and has made strives to leave markets but carry their product to other emerging markets (medical imaging technology). In couple of years, I can see them completely exiting the T.V market but bringing the technology (4k resolution, 3D) to the medical imaging sector - their next big product could be a medical device that lets doctors see MRI scans at 4k resolution in 3D to help them plan for surgery or a upcoming mother can see the face of her unborn child in 4K resolution/3d. I see that technology as something 'cool' and a market leader product; that is why I invested in Sony.

Convertible Bonds isn't exactly borrowing money, they are essentially selling company shares. According to wikipedia (http://en.wikipedia.org/wiki/Sony#Finances) Sony, has a cash reserve of 13.29 trillion yen, they technically don't need to sell convertible bonds to complete their expansion transaction (buying of Olympus stock and Gaikai), but its in their financial strategy to complete those payments without tapping far too deeply in their reserves especially when they are still expecting losses for upcoming quarters.

@Augen

A year from now, I expect Sony to complete their restructuring, yen to depreciate to 83 against the dollar to allow break even for japanese trade export. T.V losses, reduced by at leaste another 30-45%, Image sensor unit break even or profitable. As for shares price, I am hoping for $15-17, if all the things I mentioned happens.



Cobretti2 on 21 November 2012
Wlakiz said:
... if you guys have taken out a mortgage before you would understand the concept.

Lets say you borrow $300k from the bank to buy a home . In the bank's perspective, they are happy because they get free money from charging you interest rate, and you are happy yourself because you get to live in a new house or w/e. With a stroke of luck, you win a lottery and you get $70k. You can either put that money into the first mortgage and cut your amortization period by 10 years or you can do something smarter and use that $70k to put in a second down payment and get a second mortgage. Whoa whoa, wait you say, you're just going into deeper debt, because you have two mortgage to pay now! Yep, that's true but you see when I get a new home I can rent it out and use the rent to pay the mortgage, so basically my asset doubled and I pay the same amount as before.

Is Sony's situation the same? Absolutely! They are borrowing more money to invest on products/ventures that would yield them returns. What happens if the investment does not yield the desired return? No problem, it is still within their power to sell whatever they invested to pay off their creditors. The only 'risk' is if their investments becomes worthless and selling wouldn't help them pay off the creditors in which they would have to default on their payment. Right now, Sony is selling part of their assets so they can get the cash to keep the creditors happy and for them to continue investing.


Good luck doing that in Australia.

The rental return alone will not be enough to cover the second mortgage.



 

 

Galaki on 21 November 2012

What's the balance on PS3 as a whole now? Did Sony make back all the loses?



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