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Sony Corp (ADR) (NYSE:SNE) Set To Post Fourth Annual Loss; Hirai Promises Revival

Posted by: : Shayne HeffernanPosted on: May 13, 2014 Sony Corp (ADR) (NYSE:SNE) Set To Post Fourth Annual Loss; Hirai Promises Revival

Kazuo Hirai, who has been at helm of Sony Corp (ADR) (NYSE:SNE) as chief executive, has tasted a little success to revive the company from where it was two years back. After promising a turnaround in 2012, the company is set to report its fourth straight annual loss within the last five years. This has forced Hirai and other executives’ to bear an annual pay cut of 50% and skipping their bonus.

Rebuilding Pillars

Sony has lost a substantial share to brands like Apple Inc. and Samsung Electronics Co, during the past few years. Eventually, the decelerated sales have pressed the rating agencies to push the company’s debt to junk status. Importantly, the investors fear that Hirai is busy focusing on weaknesses rather than finding a strength that could bring back Sony to its earlier repute. Hirai is set to disclose the company’s long term strategy on May 22 as he promises to recreate the charm by rebuilding its three pillars, namely, games, imaging technology and mobile devices.

Real Problem

At this point of time, Sony is proving successful in its newly launched PlayStation 4, which has surpassed the sales of Microsoft Corp’s Xbox One console sales. Till early April, the company records a sale of over 7 million of its game consoles, since its launch in November. Apart from this, the company also identifies some strength in its high-definition portable music players, which is sold under the Walkman name. The company has also started focusing on its 4K television that provides improved picture quality.

But, the real problem of the company is with the incapability of any of its products to transform its bottom line. For instance, 4K TVs that account for less than 10% of global TV sales and PlayStation consoles, that could fail with the advent of SmartPhone games. Moreover, it is difficult for a niche product to make a substantial difference for a company with $75 billion annual revenue.

Arnout Van Rijn, chief investment officer at Robeco Hong Kong, who has long been investing in Sony shares state that the company is taking longer to launch a new successful product and complete its restructuring, but hopes that it is on the right track.

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Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

Trade FX, Equities and Options with the World's Leading Platform , call our trade desk 631 482 0376, or contact us to get started.

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