Thursday, July 2, 2015

Sony: The Sell-Off Is An Opportunity To Buy This Turnaround Stock

This article was first published by Seeking Alpha on July 1, 2015

By Sarfaraz A. Khan 

Summary: Sony’s shares have dropped by more than 8% following announcement of an equity and bond offering. The company has been struggling for years, but has been eyeing a turnaround by doubling down on image sensors.Sony has often disappointed investors by slashing forecasts at an average of more than two times per year, but it has transformed into a beat-and-raise story. I believe it won’t be long before the CEO Kazuo Hirai and CFO Ken Yoshida do the victory lap.

The Japanese electronics giant Sony has said that it is going to raise ¥322 billion/$2.63 billion through equity offering and ¥120 billion/$982 million through a convertible bond offering. That's a big deal for a company which hasn't issued new equity in more than two decades. The dilution fears has led to more than 8% drop in Sony's American Depository Receipts currently hovering around $28.40, but I believe this could be an opportunity to buy this turnaround stock.

Sony has been struggling for years due in large part to its focus on retaining its market share at all cost, rather than improving the bottom-line. The increasing competition from AppleMicrosoftSamsung and LG Electronics exacerbated Sony's woes. Sony also lacked any cost discipline. Sony has often outspend Apple - a company 20x its size in terms of market cap - in terms of annual selling, general and administrative expenses.

But ­­­­Sony has been eyeing a turnaround since 2012, ever since Kazuo Hirai became the new …. Read full article at Seeking Alpha.