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| p.6 #16 · Sony and Panasonic in trouble? |
Leica margins (just the BOM and assembly, no R&D included) is just under 150%. Basically - what you're doing if you buy a 5000USD Leica product is to push 2000$ down an already pretty wealthy investor's pocket. Amongst larger companies, only Apple can sucker their customers for larger margins.
Sony has been trying to aggressively expand in to many areas (and failed in some...), and they have lost the TV division. This is what causes their current situation, which may be dire from an investors PoV, but not very so from a realistic long term PoV.
The total stupidity of capitalism often staggers me. While I agree on the rationales of it, the people in power behind it are often so incompetent in long term planning that they should be assigned places in some asylum. There's a very good reason why the US real estate crash cost the secondary victim (US treasury) about 700 billion dollars per year, and everybody actually knew that reason already long before the crash. They just chose to look the other way, since they were making so much money.
Overestimation of value crashes hard, but that doesn't seem to bother many big-time players on the field, even though the crashes in the hundred-billion class come every twenty years or so, always with the same cyclic period, and always with the same chain of events leading up to it. Next to come for USA will be the treasury bonds, and honestly there's not scratch to do about it. It will "just happen". A few years after that, it will be stock market again. That anyone is surprised (this is now the fifth time this cycle reiterates) surprises me.
Some places in eastern Asia will start stepping over the front edge of the same type of bubble very soon, many of them two, or even three times harder than USA.
Well, political moaning aside, Sony isn't in as much trouble as most outer "score" and "rate" firms want to project.
They just don't pull in enough money per year to satisfy the bottomless pit of "ever-expanding profit" that the forces that drive the cyclic crashing/rebuilding would want.
But what is important for the imaging division?
Sony continues to grow their share in CMOS sensors, and will continue their 9 billion USD ongoing (since 2006) investment in CMOS fabs and CMOS R&D. Output has just now past an area (normalized) of 60,000 300mm wafers per month, about ten times more than Canon. They have however closed one lens building plant completely, and are restructuring their middle management heavily at the moment.
The fact that they still invest heavily, and that their R&D departments are still well funded (and backed) by both investors and the board of directors show that Sony has got very little of the "panic" some people seem to want to force them into.
R&D to sales volume ratio:
The fact that Apple now spend significantly more (both in next years budget plan and in actuality this year!) on lawyers than they do on R&D should be worrysome, to say the least. Their profit stands and falls with their almost-Veblen religious artifact followers - one slip-up here and they might be off the map. Remember that the very recent dip in share value (140 billion dollars the last two months...) is more monetary value than the entire accumulated profit of Apple as a company in history - since they started out in 1977... That's why they NEED money in the bank, should that have happened and they didn't - disaster. Companies that stand on on one leg are easy to topple, especially if that leg is artificial. And the market "values" and "ratings" are indeed very highly artificial.
If they were reality based and rational, stuff like stock market crashes, interest rates, housing price crashes and so on would never happen. They happen because some people drive estimates and expectations through the roof, in the interest of a never-ending increase in income (which of course is a physical impossibility...)
Companies that stand on hundreds of wobbly legs where not all of them work right will stand through stuff that would wipe less broadly based but a hundred times higher rated and valued companies clean of the chart.