| With the recent announcement that Sony (SNE) | | | | flows or balance sheet. Along with negative |
| will delay its PS3 launch in Europe, a similar | | | | operating margins and poor profit growth, I would |
| reaction should be based in your mind of whether | | | | be wary for both long and short term investors |
| to buy or sell your shares of this company. With | | | | wanting to get into this stock. |
| such a shaky corporation in terms of announcing | | | | In terms of technical analysis, Sony is as volatile |
| favorable information, the confidence in buying | | | | as it gets. It's true there are bursts of growths |
| shares of Sony has dropped as shown by its | | | | and sparks over the past few years, but the |
| stock the past few months. With the added | | | | overall trend has been downward after its terribly |
| problems of having the major laptop producers | | | | overbought status during the early parts of the |
| having to recall the specific Sony brand batteries, | | | | millennium. From 140 to 40 points is a large |
| such a situation does not pose well for this | | | | margin, even for the technology sector, but is |
| corporation and its shareholders. | | | | equally represented by its poor fundamentals. |
| Speaking in terms of fundamentals, Sony has | | | | With the added problems of a delay in its PS3 |
| done terrible the past few years. Supposedly to | | | | launch and the batteries having to be recalled, |
| be represented as a strong player in the | | | | don't look for consumer or institutional confidence |
| technology sector, margins have proven to | | | | to increase in relation to buying more shares. |
| provide counterarguments. Having negative | | | | Some investors may argue that it is possible that |
| margins the past three years does not ease any | | | | Sony is in trouble currently but, in the future |
| shareholder's concerns. While some investors may | | | | when the PS3 launches and the battery problem |
| argue that many companies still post negative | | | | is fixed, Sony should be a very low price and |
| margins and receive a favorable capital gain, with | | | | ready for a rally. While there might be truth in |
| the added problem of having these negative | | | | such a sentiment, think about when the PS2 |
| fundamentals during a time when technology is | | | | launched about six years ago. Sony was at its |
| supposed to sell more rapidly from one year to | | | | peak then and Sony shares have only gone down |
| the next, such numbers are embarrassing for a | | | | from that point regardless of the fact that Sony |
| company of Sony's nature. While some analysts | | | | won the console war against Nintendo and |
| have noticed such a trend and reduced their EPS | | | | Microsoft. With the PS3 launching during a time |
| estimates, Sony does seem to surprise investors | | | | when a recession is inevitable and consumers |
| and beat most of them but with the negative | | | | should spend left, don't look for Sony to provide |
| effect of not showing such resiliency in its cash | | | | any capital gains in the near future. |