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 Apple, Microsoft, Samsung 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.
