Reuters is reporting that Japan’s Sony Corporation is in the process of working to raise US$4B through the offering of new shares and bonds as part of its effort to “reinvent itself as a niche component maker, pulling back from consumer goods like TVs that dragged it into losses.”
Some sites are reporting that Sony is planning to put $4B into its sensor development, which is not an accurate representation of the Reuters report, though a large portion of the funds will be used for sensor development. The company will also spend to manage operations and help the company regain its footing after losses in TV and smartphone investments.
According to the article, Sony executives told Reuters that “demand for sensors was now so strong that it was struggling to keep up.”
Another mischaracterization in the coverage of this piece was that it means that Sony’s plan is to dominate the camera market with this increased production, and that also is not correct. The company is clearly reeling from the production of consumer electronics products—TVs, gaming systems and phones chief among them but all nature of CE goods have declined in overall sales. While Sony has a line of cameras that use their own sensors, it’s not primarily Sony’s own products that are fueling the demand.
Sony produces sensors for competitors in the photo space (Canon, etc.) and for sensors in other spaces (i.e., non-photographic markets) and in camera phones. The iPhone has long used a Sony sensor, for example, and this type of sensor isn’t directly related to the production of a Sony digital camera.
Of course with the economy of scale and the R&D offered through billions of new dollars of production, it’s not hard to imaging that Sony will be able to innovate around competitors in the digital camera space, but that space is shrinking in the same way that the other markets that dragged Sony down are shrinking.
Investors in Sony are a bit wary of the plan. The company is reported to be worth much less than the current stock valuation, and new shares will dilute the value of the stock even further. It’s still questionable as to whether Sony can raise all the funds, but likely, given the company’s strong position in the market.…