On Tuesday June 30, 2015, Sony Corp. issued a press release stating that it has decided to “issue new shares in addition to a secondary offering of shares to cover over-allotments and to issue 130% callable unsecured convertible bonds with stock acquisition rights (sixth series) (with an inter-bond pari passu clause).” In layman’s terms, Sony is offering more stock shares for sale to raise capital to do something and pay off something (over-allotments). Capital from the unsecured convertible bonds, as per Sony, will be applied to capital expenditures for the Devices segment of the company and repayment of indebtedness.
Next, Sony plans to use the capital raised from the issuance of new shares to increase production of and research and development for its stacked CMOS image sensors. This increased productivity in image sensors, according to the company, should increase its profitability. Apparently the company believes there is sufficient demand for these components and sees justification in raising the capital necessary to meet the demand profit by it.
Actually the big news in this story, as is to be expected on two levels, is investors felt otherwise and on Tuesday July 1, 2015, there was a somewhat significant selloff of Sony stocks. Investors showed trepidation about the plan. Share price dropped by about 8% at the end of trading on Tuesday. Consensus is that stockholders existing shares would lose initial value because of the initiative.
Sony Stacked Image Sensor
Unfortunately we have no great tech or financial story here. First, a company that makes solid products with a long history of product wins decides to raise some capital to increase production of one of its products that’s proven to be in high demand. That sounds very reasonable.
Stock holders once again exhibit casino mentality and run to sell. That sounds like business as usual. ~MD