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Forums - Sony Discussion - Is Sony too large fo a company to go bankrupt?

GT alone... makes them billions



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marc said:
RVDondaPC said:
marc said:

#1 - Bitter? I was crushed because I loved games and I thought Sony would be my dream job. They were just bullies playing favorites and if you showed even a little talent they became hostile. The environment showed me the bad side to corporate behavior. I was just out of college at the time.

#2 - I took dividends into account for all my calculation. Even with the dividends, their business has performed poorly since '78. The Nasdaq index also pumps out dividends it just doesnt show up on most graph because its an index.

#3 - I was measuring Sony as a company not video games specifically. This thread was about the possibility of Sony going under. The author did not specify what part of Sony. I am fairly certain that he meant Sony as in the corporation not just the game division.

From a financial perspective they are a failure. Whevenever you can invest in 6% CD's and outperform a stock over 20 years, that company has serious issues.

You mean to tell me you sat there and calculated today's value for all 50+ dividend payments from Sony stock? And how did you calculate today's value? Did you use just inflations, did you use the Dow Jones average increase assuming investment in another stock, did you assume reinvestment into more Sony stock, or did you assume happiness was purchased with these dividends?

 

@#3 yeah it was and that was fine until you started to compare Sony as a whole to MSFT and Nintendo as a whole to determine whether or not it's been under performing in its "sector. " Financially it can't compete, but Sony is in a lot of highly competitive, low margin industries while MSFT is mostly in an extremely rare high margin market, which was borderline monopolistic. 


Yea its just addition and I did it all in my head (big wow). I even took into account splits. Not exactly rocket science.

+/- $0.15 cents immediate volitility isnt going to make a huge difference in Sony's long term numbers.

Reinvestment is meaningless in our calculation because I didnt assume reinvestment for any of the other stocks (except for the 6% CD because they are guaranteed). Regardless, because Sony has underperformed the index, if you had reinvested back into Sony, you would have actually made your performance even worse because the gap would have grown wider over time. 

That's where you went wrong. What do you think MS and Nintendo are doing with all that cash they are holding on to? They are investing it. That's the whole point of not paying out dividends. It's so the company can invest that money on their own. If they pay a dividend it's because they feel that the stock holders would be better off investing that money on their own rather than the company doing it as a whole. You didn't assume reinvestment with the other companies because the reinvestment of profits is assumed by the stock price increase. 

Also just because Sony under performed the market average(under the assumption your calculations are correct, which they are not) doesn't mean you lost money. And It also doesn't mean that reinvesting dividends in the company would make you lose even more money. It just means you didn't make as much money as the average stock did. You are getting under performing the market and "losing money" mixed up. They are completely two different things. If the market saw a 500% increase over 20 years and Sony saw a 400% increase that is under performing the market but still making a return. If those dividends were invested and reinvested over the course of those 20 years they would be worth way more than the simple addition that you claim it to be. 

I think you are trying too hard to make Sony look bad for their failures that you are ignoring things that you otherwise wouldn't when analyzing a company's performance. 



Wouldn't Sony receive some form of bailout if they were going under anyway? I mean they own a lot of physical premises and hold jobs for 185,000 employees...



Was the Roman Empire to big to Fall?

Was the Mongolian Empire to big to Fall?



Xero said:
Wouldn't Sony receive some form of bailout if they were going under anyway? I mean they own a lot of physical premises and hold jobs for 185,000 employees...

No they wouldn't. Those things get sold off to other companies or investors they don't just disappear. Sony could go bankrupt and the head of SCE could potentially still keep his job if it was a restructuring bankruptcy or if the SCE was sold off to another company. Many people may lose their jobs but also many of those employees could keep their jobs. Just like how here(in the states) when Washington Mutual went bankrupt, Chase bought it and many of the Washington Mutual employees became Chase employees and Washington Mutual's buildings (whether leased or owned) became Chase bank's. When a company goes bankrupt, it doesn't mean it all just disappears. 



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RVDondaPC said:
marc said:
RVDondaPC said:
marc said:

#1 - Bitter? I was crushed because I loved games and I thought Sony would be my dream job. They were just bullies playing favorites and if you showed even a little talent they became hostile. The environment showed me the bad side to corporate behavior. I was just out of college at the time.

#2 - I took dividends into account for all my calculation. Even with the dividends, their business has performed poorly since '78. The Nasdaq index also pumps out dividends it just doesnt show up on most graph because its an index.

#3 - I was measuring Sony as a company not video games specifically. This thread was about the possibility of Sony going under. The author did not specify what part of Sony. I am fairly certain that he meant Sony as in the corporation not just the game division.

From a financial perspective they are a failure. Whevenever you can invest in 6% CD's and outperform a stock over 20 years, that company has serious issues.

You mean to tell me you sat there and calculated today's value for all 50+ dividend payments from Sony stock? And how did you calculate today's value? Did you use just inflations, did you use the Dow Jones average increase assuming investment in another stock, did you assume reinvestment into more Sony stock, or did you assume happiness was purchased with these dividends?

 

@#3 yeah it was and that was fine until you started to compare Sony as a whole to MSFT and Nintendo as a whole to determine whether or not it's been under performing in its "sector. " Financially it can't compete, but Sony is in a lot of highly competitive, low margin industries while MSFT is mostly in an extremely rare high margin market, which was borderline monopolistic. 


Yea its just addition and I did it all in my head (big wow). I even took into account splits. Not exactly rocket science.

+/- $0.15 cents immediate volitility isnt going to make a huge difference in Sony's long term numbers.

Reinvestment is meaningless in our calculation because I didnt assume reinvestment for any of the other stocks (except for the 6% CD because they are guaranteed). Regardless, because Sony has underperformed the index, if you had reinvested back into Sony, you would have actually made your performance even worse because the gap would have grown wider over time. 

That's where you went wrong. What do you think MS and Nintendo are doing with all that cash they are holding on to? They are investing it. That's the whole point of not paying out dividends. It's so the company can invest that money on their own. If they pay a dividend it's because they feel that the stock holders would be better off investing that money on their own rather than the company doing it as a whole. You didn't assume reinvestment with the other companies because the reinvestment of profits is assumed by the stock price increase. 

Also just because Sony under performed the market average(under the assumption your calculations are correct, which they are not) doesn't mean you lost money. And It also doesn't mean that reinvesting dividends in the company would make you lose even more money. It just means you didn't make as much money as the average stock did. You are getting under performing the market and "losing money" mixed up. They are completely two different things. If the market saw a 500% increase over 20 years and Sony saw a 400% increase that is under performing the market but still making a return. If those dividends were invested and reinvested over the course of those 20 years they would be worth way more than the simple addition that you claim it to be. 

I think you are trying too hard to make Sony look bad for their failures that you are ignoring things that you otherwise wouldn't when analyzing a company's performance. 

So let me see if I got this right. You state that my calculations "are not" correct, because aparently I dont know basic math, yet you wont take the 5 minutes to go and do the math yourself to verify... but you do take the time to reply and tell me I am wrong in a 3 paragraph post. Put your money where your mouth is. Do the calculations and show me the work in your post so we can cross reference.

Second, you did indeed lose money if you had invested based on 10 year metric. Please dont use my statements out of context.

Sony did lose 45% since 2000. This is a fact.
Sony did gain 111% since 1999. This is also a fact.
Sony did underperform the market by 900% since 1978. Fact.

Stating that I "went wrong" is irresponsible. Do the math and backup your claim that I "went wrong." Due diligence please.

Your dividend argument... completely irrelevent to the calculations because; All the companies listed operate as corporations and the dividends are so low that they will not effect the calculations very much. You seem to have a basic understanding of retained earnings but you are not making the connection that when comparing these companies, it doesnt matter if you reinvest the divvy or not as long as the comparison is uniform given how low all these dividend rates are. Sony barely gives 0.75%. MSFT barely pays 1.5% historically. Etc. Tech stocks in general do not pay out much in dividends which is why so many people lost their behinds in the .com crash and again in '08 crash. Whether or not you like dividends is irrelevent to this comparison.

Please read my post again. There was no mistake in my distinctions between loss and underperformance. Furthermore, as you pointed out, you did indeed lose potential gains because you did not meet market averages. You seem to understand that, but you seem to be defending Sony for whatever reason. I am just responding to the thread in context of history; Sony underperformed despite their great run last decade. They are losing money, they have a huge debt ratio for a tech stock, and their market value is in decay.



even if does like toyota, japan would bail em abit



Sony as a whole yes, Sony as a gaming company could easily go bankrupt.



marc said:

So let me see if I got this right. You state that my calculations "are not" correct, because aparently I dont know basic math, yet you wont take the 5 minutes to go and do the math yourself to verify... but you do take the time to reply and tell me I am wrong in a 3 paragraph post. Put your money where your mouth is. Do the calculations and show me the work in your post so we can cross reference.

Second, you did indeed lose money if you had invested based on 10 year metric. Please dont use my statements out of context.

Sony did lose 45% since 2000. This is a fact.
Sony did gain 111% since 1999. This is also a fact.
Sony did underperform the market by 900% since 1978. Fact.

Stating that I "went wrong" is irresponsible. Do the math and backup your claim that I "went wrong." Due diligence please.

Your dividend argument... completely irrelevent to the calculations because; All the companies listed operate as corporations and the dividends are so low that they will not effect the calculations very much. You seem to have a basic understanding of retained earnings but you are not making the connection that when comparing these companies, it doesnt matter if you reinvest the divvy or not as long as the comparison is uniform given how low all these dividend rates are. Sony barely gives 0.75%. MSFT barely pays 1.5% historically. Etc. Tech stocks in general do not pay out much in dividends which is why so many people lost their behinds in the .com crash and again in '08 crash. Whether or not you like dividends is irrelevent to this comparison.

Please read my post again. There was no mistake in my distinctions between loss and underperformance. Furthermore, as you pointed out, you did indeed lose potential gains because you did not meet market averages. You seem to understand that, but you seem to be defending Sony for whatever reason. I am just responding to the thread in context of history; Sony underperformed despite their great run last decade. They are losing money, they have a huge debt ratio for a tech stock, and their market value is in decay.

 

You do know basic math, but finding today's value of owning a stock 20 or 30 years ago that pays a dividend is not basic math. 

If you bought 100 shares of Sony in 1983 at $6.20 that would be $620 invested. The first dividend is paid out at .038 cents a share. That's $3.80(100 shares X .038). If you reinvested that money into Sony at the price of $6.30(thats how much the stock was at the time). Then you would have 100.63 shares. The next dividend was paid at $.039 that would be $3.92(100.63 X $.039) reinvested at a price of $5.94 that would give you an additional .66($3.92/$5.94) shares to total 101.29 shares. The next dividend is $.041 which would give you $4.15, reinvested at the price of $6.12 would net you an additional .68 shares, which give you a total of 101.97. 

101.97 shares X .037 = $3.77/$6.45 =.58 shares

102.55 X .0415 =$4.26/$6.73 = .63 shares

103.18 X .043 =$4.44/$7.20 = .62

103.8 X .051 = $5.29/$9.51 = .56

104.36 X .0595 = $6.21/$8.48 = .73

105.09 X .05 = $5.25/$8.37 = .63

105.72 X .07 = $7.40/ $14.62 = .51

106.23 X .066 = $7.01/$14.88 = .47 

106.7 X .0725 = $7.74/$17.17 = .45 (3/88)

107.15 X .035 = $3.75/$19.96 = .19 (8/88)

107.34 X .073 = $7.84/$21.31 = .37 (3/89)

107.71 X .0725 = $7.81/$25.67 = .30 (8/89)

108.01 X .067 = $7.24/$21.17 = .34 (3/90)

108.35 X .0755 = $8.18/$17.13 = .48 (8/90)

108.83 X 2.1125 = $231.26/$17.60 = 13.14 (8/91) <-- Note large amount incase you want to double check

121.97 X .08 = $9.76/$14.53 = .67 (3/92)

122.64 X .0985 = $12.08/$15.38 = .79 (8/92)

123.43 X .1025 = $12.65/$18.34 = .69 (3/93)

124.12 X .1175 = $14.58/$20.48 = .71 (8/93)

124.83 X .1175 = $14.67/$27.21 = .54 (3/94)

125.37 X .125 = $15.67/$28.29 = .55 (8/94)

125.92 X .125 = $15.74/$23.81 = .66 (3/95)

126.58 X .115 = $14.56/$25.88 = .56 (8/95)

127.14 X .1175 = $14.94/$29.85 = .50 (3/96)

127.64 X .113 = $14.42/$31.38 = .46 (8/96)

128.1 X .1215 = $15.56/$35.82 = .43 (3/97)

128.53 X .10 = $12.85/$46.68 = .28 (8/97)

128.81 X .098 = $12.62/$43.21 = .29 (3/98)

129.1 X .09 = $11.61/$34.38 = .34 (8/98)

129.35 X .0875 = $11.32/$47.86 = .24 (3/99)

129.59 X .114 = $14.77/$75.72 = .20 (8/99)

129.79 X 2 = 259.58 shares (2:1 stock split 5/25/2000) <--- note stock split

259.58 X .118 = $30.63/$112 = .27 (8/00)

259.85 X .104 = $27.02/$70.80 = .38 (3/01)

260.23 X .103 = $26.80/$35.25 = .76 (8/01)

260.99 X .054 = $14.09/$51.70 = .27 (3/02)

261.26 X .105 = $27.43/$41.20 = .67 (8/02)

261.93 X .107 = $28.03/$36.76 = .76 (3/03)

262.69 X .107 = $28.10/$36.55 = .77 (8/03)

263.46 X .113 = $29.77/$41.98 = .71 (3/04)

264.17 X .114 = $30.12/$35.07 = .86 (8/04)

265.03 X .113 = $29.94/$33.05 = .91 (8/05)

265.94 X .107 = $28.46/$46.07 = .62 (3/06)

266.56 X .107 = $28.52/$40.86 = .70 (8/06)

267.26 X .107 = $28.60/$50.49 = .57 (3/07)

267.83 X .108 = $28.93/$48.06 = .60 (8/07)

268.43 X .28 = $75.16/$32.41 = 2.32 (8/08)

270.75 shares.

If you reinvested all dividends back into Sony stock you would currently own 270.75 shares of Sony Stock. At a current price of $36.81 that gives you a value of $9,966.31. I believe your method was the simple initial 100 shares at $6.20(the $6.20 is used to keep it consistant with my numbers), Split to 200 shares at the current price of $36.81, which gives you a value of $7,362. Then you added the dividend which comes out to $7.23. We multiply that by the 100 shares to give us $723 and add that to the $7,362 to get $8,085. If that is not how you calculated the performance of the stock, please correct me.  

If you take my value of $620 initial investment and end with a $9,966.31 value, that is a 1,507% return on investment. If you go by stock prices only the $6.20 price compared to the $36.81 then that is only a 493% return on investment, a 987% if you factor in the stock split. Using what I assume is your method it's only a 1,204% return on investment.  

Yes Sony does pay a relatively low dividend rate compared to other sectors and the last 10 years or so of dividends has relatively little impact on the ROI but it still adds up over time and they've been doing it long before the 2000's. If Sony had kept their dividend and invested it at the rate of the rest of their capital their stock value would currently be $93.43(6.20 X 1507%). I'm not going to declare which company is bigger or try to argue that Sony is as big as Microsoft or anything or even that Sony is the best stock ever or anything, but when determining the long term success of a company or the long term value to a stock holder it is not fair to use just the stock prices when one company has a long history of paying a dividend and the other company doesn't. It's basically setting up a system to favor one company's strategy to return value to investors over the others. You will get a flawed result. A much quicker result but a flawed result. 

As for the loss claims. Ok they lost "potential" gains because Sony didn't meet the market average, but that doesn't mean investors lost money. So when money was reinvested into Sony they were still making more of a return by reinvesting the dividends than they would be if the dividends just stood still and went into nothing which your method seemed to be using. 



Let's hope it never comes nearly to be bankrupt. Because they have made popular many things and invented many. Without them, the technology world would not progress as it is now.

Look for example, it made DVD popular with PS2, and Blu Ray with PS3. It tried mini DVD (UMD) with PSP but did not succeed. But they are trying to make formats for people and spending money behind it which other companies are not.