Sony's share price slides to 30-year low

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11 May, 2012

Electronics firm insists it will turn a profit, despite smartphone chip supply constraints.

Shares in Sony have slumped to a near 32-year low, as investors lose confidence in the company’s ability to compete with Apple and Samsung in the smartphone market.

The last time Sony shares were this low, in the summer of 1980, its first Walkman portable cassette player had just gone on sale in the United States.

The maker of Bravia TVs, Vaio laptops and PlayStation games consoles on Thursday posted a record annual loss of $5.7 billion, but forecast a first profit in five years as it looks to halve losses at its ailing TV business. The profit forecast was below analysts' expectations.

"I didn't see anything positive in there (Sony's results)," said a trader at a U.S. bank. "There's really nothing in there that can justify buying the stock. You see the loss narrowing in the TV business. That's fine, but I don't see any future in the TV business, so it doesn't matter what they do."

Analysts said the Sony results were largely neutral while its forecasts looked optimistic.

"We see no catalyst that might spur a sustained (share) rally," Deutsche Bank analyst Yasuo Nakane wrote in a note.

There's really nothing in Sony results that can justify buying the stock

Shiro Mikoshiba, Nomura Equity Research analyst, wrote: "We still regard downsizing and product strategies worthy of the Sony brand as indispensable preconditions of any share price upside."

While Mikoshiba sees a sharp profit rebound towards the end of this calendar year, "uncertainty surrounding sales of core products, including TVs, smartphones and digital cameras (means) we're unable to pin down a turning point for the share price."

"In our view, guidance for profit improvement in digital cameras, games, li-ion batteries and smartphones looks optimistic and we see downside risk," Goldman Sachs analysts wrote in a client note, keeping their 'sell' rating on the stock.

"We think TV losses may be smaller than the company forecasts ... but we see significant downside risk to overall guidance."

The US bank trader said Sony's forecast of 33 million smartphone shipments in the year to next March looked optimistic given that its supplier, Qualcomm, faced capacity constraints and the firm's priority is to supply Apple. This could leave Sony without enough smartphone chips to meet its target, he added.

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