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