| 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.
