Sony and Panasonic in trouble?

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FlyPenFly
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p.5 #1 · Sony and Panasonic in trouble?

Honestly, you can still take amazing pictures with a d50.

Nov 12, 2012 at 10:07 AM

Spyro P.
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p.5 #2 · Sony and Panasonic in trouble?

slungu wrote:
What I am little puzzled at is the fact that the article shown speaks about Sony getting some trouble finding fresh money and then stating that the compact cameras sales are in trouble. I am having a hard time figuring out how a huge company that is active in many markets can have such a big trouble if one part of one market is not doing so well. Sony is not (only) about cameras, they are mainly known for other stuff in the first place. If they are having troubles in general because they do not have the black Trinitron for TVs, the walkman was replaced by the ipod, the Vaio by the Macbook and so on that is something I can understand - and I have an impression that this is the case, but other than that I do not see it as being that bad.

I can give you something to compare to: Sony's debts are about the same size as the public debt of Russia.... seriously.
this type of companies have a lot of intangible assets relating to specific brands: names & trademarks, capitalised research, software, copyrights etc, and they use them to offset/collateralize their debt
When the related brand name stops selling, these types of assets can lose value incredibly quickly and creditors and credit rating agencies start to freak out. Not that different than a dotcom in that sense
I havent really studied Sony's financials so it might not be applicable in their case, just one of many things that could've gone wrong. But the company is a giant, literally too big to fail, and I'm surprised their govt said it's not gonna bail them out. I think they will in the end, IF it comes down to that. Maybe they can still turn it around on their own

Nov 12, 2012 at 10:39 AM

FlyPenFly
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p.5 #3 · Sony and Panasonic in trouble?

Way are they going to sell though? TVs? Nope. They're a distant third in dslrs... Video cameras maybe. Smartphones nope. Walkmans nope.

Nov 12, 2012 at 10:51 AM

Spyro P.
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p.5 #4 · Sony and Panasonic in trouble?

It looks like their best selling segment is mobiles/comms, followed by home entertainment, devices, financial services (??), imaging, pictures, gaming and music. Imaging is profitable, financial services is the most profitable, most others are loss making

Maybe they're better off becoming a bank

Nov 12, 2012 at 11:03 AM

rattymouse
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p.5 #5 · Sony and Panasonic in trouble?

Spyro P. wrote:
slungu wrote:
What I am little puzzled at is the fact that the article shown speaks about Sony getting some trouble finding fresh money and then stating that the compact cameras sales are in trouble. I am having a hard time figuring out how a huge company that is active in many markets can have such a big trouble if one part of one market is not doing so well. Sony is not (only) about cameras, they are mainly known for other stuff in the first place. If they are having troubles in general because they do not have the black Trinitron for TVs, the walkman was replaced by the ipod, the Vaio by the Macbook and so on that is something I can understand - and I have an impression that this is the case, but other than that I do not see it as being that bad.

I can give you something to compare to: Sony's debts are about the same size as the public debt of Russia.... seriously.
this type of companies have a lot of intangible assets relating to specific brands: names & trademarks, capitalised research, software, copyrights etc, and they use them to offset/collateralize their debt
When the related brand name stops selling, these types of assets can lose value incredibly quickly and creditors and credit rating agencies start to freak out. Not that different than a dotcom in that sense
I havent really studied Sony's financials so it might not be applicable in their case, just one of many things that could've gone wrong. But the company is a giant, literally too big to fail, and I'm surprised their govt said it's not gonna bail them out. I think they will in the end, IF it comes down to that. Maybe they can still turn it around on their own

Bailing out failed companies is a recipe for disaster. Failed companies must be allowed to fail. They failed for a reason and if those actions do not have consequences, then they are reinforced. If anything Japan should manage the break up of Sony.

Nov 12, 2012 at 12:19 PM

Spyro P.
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p.5 #6 · Sony and Panasonic in trouble?

rattymouse wrote:
Bailing out failed companies is a recipe for disaster. Failed companies must be allowed to fail. They failed for a reason and if those actions do not have consequences, then they are reinforced.

OMG it's THAT discussion again

You can talk to 10 econo-politicians and you'll get 10 different answers on the same issue...
Liberals: let it fail
Keynesians: print money to stimulate it
Socialists: socialise it
Communists: told ya, it's the inherent contradictions of capitalism!
Libertarians: it failed because of taxes! no more taxes!
Labour: they need more wages, subsidise them
Banksters: give them another loan, ask for a govt guarantee
Social democrats: Not sure, lets have another Eurogroup Summit to think about it

Greeks: they cooked the books but I know the CEO's mother's cousin, take a bribe and give them a grant

Nov 12, 2012 at 12:46 PM

Airbag
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p.5 #7 · Sony and Panasonic in trouble?

Sony will survive, but I am not so sure about Panasonic.

Sony is sat on a LOT of cash. Their turnover is also increasing - so there is no shortage of revenue.

They do however need to be pretty brutal about restructuring. I believe they are making some efforts to do this so I am inclined to think they are going to be fine in one form or another.

Their imaging division is successful, for sure and they have made it clear they intend to grow this business considerably. Considering the impact they have had on the sensor manufacture business, we can expect to see more and more development in the photo sector. By both making their own cameras and also placing their sensors in other makers, they have a pretty robust business so I don't think there is any cause to worry about Sony in terms of their photo business.

Sony's losses this year are much reduced compared to last year. So they are heading in the right direction.

I do worry about Panasonic however.

The China / Japan friction is a factor affecting Japanese companies sales in China, but this is just politics being played out and things will return to normal pretty quickly.

Nov 12, 2012 at 01:10 PM

MarcG19
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p.5 #8 · Sony and Panasonic in trouble?

rattymouse wrote:
slungu wrote:
But the company is a giant, literally too big to fail, and I'm surprised their govt said it's not gonna bail them out. I think they will in the end, IF it comes down to that. Maybe they can still turn it around on their own

Bailing out failed companies is a recipe for disaster. Failed companies must be allowed to fail. They failed for a reason and if those actions do not have consequences, then they are reinforced. If anything Japan should manage the break up of Sony.

That's not the way it is in Japan (or the rest of Asia for that matter). The governments spent huge money making big businesses (see the wiki article on Keiretsu for Japan, Chaebol for Korea. Mainland China has its own version of this, and so do Hong Kong and Taiwan, though in the latter cases small and medium enterprises are stronger). Big businesses are national icons, employ lots of people (directly and indirectly), are tied into the banking system and do not just have politicians in their pockets - the politicians and business elites are part of the same governing system. Ending the system would be revolutionary.

Many Asians (my mom being one) are brainwashed into heavily preferring what they perceive as "their own" nation's products, since that will make the country strong and keep people unemployed. They are not generally open to the idea of to the detriment of innovation.

So, talk aside, Japan will "bail out" Sony and the other electronics makers if necessary. I see consolidation as the only likely alternative scenario to "limping along".

Spyro P. wrote:
It looks like their best selling segment is mobiles/comms, followed by home entertainment, devices, financial services (??), imaging, pictures, gaming and music. Imaging is profitable, financial services is the most profitable, most others are loss making

Maybe they're better off becoming a bank

That's the whole point of the Asian big business system. All the things together reduce risk and expand the company's clout.

And I mention all the above not to argue that the Asian system is better - I would not support such a system in the USA. Working in such a system would drive me nuts (all the weaknesses of the US private and public sector with none of the benefits), and such a system stifles innovation and entrepreneurship. It also causes many people to resent the big companes/government (I'm told, for instance, that many Koreans hate Samsung for this exact reason). Japan, for one, has some very competitive companies outside of the government-corporate system and a tremendous amount of creativity and even entrepreneurial talent. But much of society's money and talent is allocated elsewhere.

Finally, Thom Hogan put out and excellent article talking about these same things. He claims to have a very strong evidence base, and while I can't evaluate that I can say the evidence he uses in the article and his argumentation is excellent.

http://www.sansmirror.com/newsviews/the-near-future-of-mirrorle.html

Bottom line: things will limp along for at least a few generations, though Panasonic will have a particularly tough next year or two (and its imaging business *might* disappear in the near future). What the future holds in store is anyone's guess. I'll agree with that.

Nov 12, 2012 at 03:38 PM

carstenw
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p.5 #9 · Sony and Panasonic in trouble?

Airbag wrote:
Sony is sat on a LOT of cash.

The numbers listed earlier in this thread were $7.5 billion cash vs. $140 billion debt, and $20 billion in quarterly revenue.

Nov 12, 2012 at 04:45 PM

Bifurcator
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p.5 #10 · Sony and Panasonic in trouble?

michaelwatkins wrote:
Family units buying a decent 2011 or 2012 model camera with then-current or state of the art sensors have bought a whole lot of camera. No doubt there are some of us here who could draw a line in the sand at this point in time with gear we have and shoot a long long time without "upgrading". I'm buying a RX1 with exactly that in mind... I don't see how I'll need to upgrade that for 5 or 10 years or perhaps longer if the thing still runs.

You can be assured that it will not - assuming you actually use the thing!

Someone that buys a D600 or an A99 as a family camera... do they really need to consider a tech refresh in five years?

And if "they" actually do use the thing then yes of course. In five years there will features of wonderful and lustful convenience which everyone will want. Better IQ too!!! Even in the past couple of years we have watched DR increase and ISO noise decrease noticeably while bringing us features like 3D tracking, Smile and face detection, in-camera processing and FX, faster card I/O, in-camera wireless intranet and internet "sharing", and so on. One would have to be daft to believe that cameras in 5 or 10 years will still be anywhere close to what they are currently. On the horizon are curves sensors, post capture focusing with DOF placement selection, real-time 32bit HDR captures for post capture exposure selection, and of course higher and higher ISO competence. Pretty much anyone using their cameras much will want or lust after all those things.

FlyPenFly wrote:
Honestly, you can still take amazing pictures with a d50.

Or an Olympus 4040 too but you don't read any buzz about that any more and you don't see anyone posting images from it either. While there still might be (but I doubt it) a few D50 shooters out there I guess no one actually wants to deal with high noise slow-arse 6mpx images. It's just how consumerism works and certainly everyone here is caught up in that.

Nov 12, 2012 at 09:16 PM

rattymouse
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p.5 #11 · Sony and Panasonic in trouble?

carstenw wrote:
Airbag wrote:
Sony is sat on a LOT of cash.

The numbers listed earlier in this thread were $7.5 billion cash vs. $140 billion debt, and $20 billion in quarterly revenue.

Given such numbers, Sony's cash pile is pretty meaningless.

Nov 12, 2012 at 10:09 PM

Airbag
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p.5 #12 · Sony and Panasonic in trouble?

rattymouse wrote:
carstenw wrote:
Airbag wrote:
Sony is sat on a LOT of cash.

The numbers listed earlier in this thread were $7.5 billion cash vs. $140 billion debt, and $20 billion in quarterly revenue.

Given such numbers, Sony's cash pile is pretty meaningless.

Not at all. You don't understand how debt works. The key thing is the nature of the debt, to whom it is owed, it's seniority and the rate of interest Sony have to service.

Sony aren't likely to have any problems servicing this debt given that turnover is healthy. And the debt is not going to be called. This is a fundamental difference in Japan compared to many western economies and explains partially why the Japanese economy, although flatlining, is still resilient.

The key thing about holding 7bn is cash is that this allows Sony to invest so that they increase income and ultimately profitability. A good example of this is how they have sunk their teeth into Olympus.

I'm no brand fanboy. But of all the Japanese electronics companies , Sony is the one that can service it's debt on the back of growing income, and also with the cash to invest to grow income further. Provided they invest wisely and continue to grow revenue, they are likely to be fine.

Nov 12, 2012 at 10:51 PM

rattymouse
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p.5 #13 · Sony and Panasonic in trouble?

Sony's debt has a rating, and it is one small step away from JUNK status. As such Sony's debt has a far higher cost to service than a healthy company would have. Why does Sony's debt have such a poor rating? Because analysts looking at the health of Sony see a dire situation. They wont lend money except at a much higher interest rate.

If Sony's situation were well off, their debt would be AAA. It's not and what's more, it is not even close to that.

Nov 13, 2012 at 12:35 AM

Jon Guilbault
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p.5 #14 · Sony and Panasonic in trouble?

rattymouse wrote:
If Sony's situation were well off, their debt would be AAA. It's not and what's more, it is not even close to that.

I'm sorry, but I'm going to have to point out that you have no idea how corporate debt is rated. If their situation was "well off" they'd have AAA status? Most countries don't have AAA status... Japan, the country in which Sony and many of its competitors are located doesn't have AAA status! China doesn't have AAA status. The only corporation I can think of off the top of my head with a AAA rating these days is Exxon. Up until recently, Exxon was the largest company in the world in terms of asset value. (EDIT: And before some pedant jumps down my throat, I know there are a bunch of others. This is off the top of my head. There aren't many; that's the point.)

Junk bonds, despite the terrible-sounding name, are simply bonds which traditional banks are prevented from investing in. Banks are only allowed to make extremely safe investments. Many municipal bonds have junk status. The vast majority of corporate debt issuance world wide is in junk bonds, and many healthy and successful companies issue bonds rated junk (<BBB by S&P for example) for years and years and thrive.

That's not to say Sony is thriving. It's certainly not. But there's a lot of opinions that are complete BS being thrown around here.

AAA? Show me any of Sony's competitors that issue bonds rated at AAA, i.e. are "well off" according to your standards. I don't think they exist. As for non camera companies. Off the top of my head, last I checked, IBM isn't AAA. Berkshire Hathaway isn't. Pfizer isn't.

Grumble, grumble. Sorry for the rant. Onto the wild and rampant forum speculation.

Edited on Nov 13, 2012 at 03:04 AM · View previous versions

Nov 13, 2012 at 02:59 AM

Jon Guilbault
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p.5 #15 · Sony and Panasonic in trouble?

By the way, another useful example would be that Sony has approximately equal chance of failing as Spain and Italy do...

Nov 13, 2012 at 03:01 AM

harrygilbert
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p.5 #16 · Sony and Panasonic in trouble?

Was researching a new TV, and the reviews on Sony products are not complimentary. Many complaints.

Nov 13, 2012 at 03:08 AM

rattymouse
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p.5 #17 · Sony and Panasonic in trouble?

Jon Guilbault wrote:
rattymouse wrote:
If Sony's situation were well off, their debt would be AAA. It's not and what's more, it is not even close to that.

I'm sorry, but I'm going to have to point out that you have no idea how corporate debt is rated. If their situation was "well off" they'd have AAA status? Most countries don't have AAA status... Japan, the country in which Sony and many of its competitors are located doesn't have AAA status! China doesn't have AAA status. The only corporation I can think of off the top of my head with a AAA rating these days is Exxon. Up until recently, Exxon was the largest company in the world in terms of asset value. (EDIT: And before some pedant jumps down my throat, I know there are a bunch of others. This is off the top of my head. There aren't many; that's the point.)

Junk bonds, despite the terrible-sounding name, are simply bonds which traditional banks are prevented from investing in. Banks are only allowed to make extremely safe investments. Many municipal bonds have junk status. The vast majority of corporate debt issuance world wide is in junk bonds, and many healthy and successful companies issue bonds rated junk (<BBB by S&P for example) for years and years and thrive.

That's not to say Sony is thriving. It's certainly not. But there's a lot of opinions that are complete BS being thrown around here.

AAA? Show me any of Sony's competitors that issue bonds rated at AAA, i.e. are "well off" according to your standards. I don't think they exist. As for non camera companies. Off the top of my head, last I checked, IBM isn't AAA. Berkshire Hathaway isn't. Pfizer isn't.

Grumble, grumble. Sorry for the rant. Onto the wild and rampant forum speculation.

OK, using AAA as an example might have been off, but my point still stands. If Sony's finances were not perilous, they would not be rated one step away from JUNK. JUNK is speculative, not investment grade debt. Further, Sony has to pay a lot more to service their enormous debt.

Nov 13, 2012 at 03:30 AM

Spyro P.
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p.5 #18 · Sony and Panasonic in trouble?

Jon Guilbault wrote:
By the way, another useful example would be that Sony has approximately equal chance of failing as Spain and Italy do...
this-is-not-very-encouraging

Spain and Italy have major troubles servicing their debt, and if it wasnt for the ECB/EU buying up their bonds and re-capping Spanish banks I'm not sure where they'd be right now

Nov 13, 2012 at 05:33 AM

Spyro P.
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p.5 #19 · Sony and Panasonic in trouble?

By the way, Sony's credit rating is currently Baa3
This is the same as Greece had until mid-2009

At the same time Moodys reckoned Greece was A2

Nov 13, 2012 at 05:49 AM

thrice
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p.5 #20 · Sony and Panasonic in trouble?

harrygilbert wrote:
Was researching a new TV, and the reviews on Sony products are not complimentary. Many complaints.

That is entirely in contrast to my experience.
Got a link?

Nov 13, 2012 at 07:02 AM

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