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slowmo on 16 May 2012
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justinian said:
slowmo said:
justinian said:
Millenium said:
justinian said:

Aren't Sony's total assets about US$165bn? Regardless of the current state of their stock value.

152.77bn I believe, but I'll have to check to be sure.


So are these assets factor into the overall value of the company?

I just don't get how MS can make more profit in a year than Sony is worth. Is that just idiot talk or am I missing something

 

A company is only worth what someone will pay for their stock, you can have all the assests under the sun but if your assets barely cover the cost of your lending then your a substantial risk.  This risk is proving to be a serious concern now to an extent the markets are rapidly losing faith in Sony as a investment. 

I see. Thanks. I read the bolded bit to be "the cost of your borrowing" and assumed you made a typing error.

In other words I can have a bar of gold that is worth 10K but if I was in a desperate situation and potential buyers knew that I was in a desperate situation for cash they would offer and I would accept a lot less for it. Not quite a full analogy but that is almost the gist of it.


Good correction . 

That's pretty much my understanding, you become a greater risk if you don't have enough assets to clear the debt in event of foreclosure.  The more of a risk you are the more it costs you to borrow and of course a company under threat is worth less to a potential buyer/investor.  As such Sony will be looking to clear some of their debt, possibly through the sale of assets and cut costs to increase profitability. 

As part of a move to increase their profitability is likely they will also sell some of the worse performing portions of the company.  If these cuts they make or plan are strong enough to convince the market that Sony will become a stronger investment opportunity in the future then confidence will increase in the markets and their price will start to rise again.  Once the risk starts to decrease, their borrowing becomes cheaper and hence they can drive further growth through investment (possibly through aforementioned cheaper borrowing). 

It looks pretty gloomy at the moment as the thread suggests but really they just need good leadership, a strong agressive business strategy and most importantly a bit of luck (frankly the global recession and tsunami really hurt them).  I'd like to see Sony succeed as I admired the company and their brand in the 90's but they seemed to lose their way after that for me becoming a premium price product without the previous quality (purely my opinion based on some purchases I made).  I think a leaner more agressive Sony could have a bright future.