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Author Topic: Sony and Panasonic bonds downgraded to "junk" status  (Read 2505 times)
Isaac
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« on: November 22, 2012, 04:22:21 PM »
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Ratings agency Fitch has downgraded Sony and Panasonic bonds to "junk" status.
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francois
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« Reply #1 on: November 23, 2012, 04:31:10 AM »
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Looks like those two tech giant are the first to suffer from the cut-throat, take-no-prisoner competition. Too bad, both companies have excellent products…
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Francois
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« Reply #2 on: November 23, 2012, 06:01:09 AM »
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Sony has been bleeding money for some time.  I think Panasonic's financial performance hasn't been stellar either.  Not surprising really. 
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NancyP
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« Reply #3 on: November 23, 2012, 03:39:07 PM »
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Nikon must be concerned about its sensor outsourcing to Sony.
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michael
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« Reply #4 on: November 23, 2012, 03:46:08 PM »
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Let's not misinterpret this. Both companies are huge multinationals active in literally hundreds of different business. Both have suffered greatly in their TV business against the Koreans, but both have major operations that continue to be highly profitable.

Overall though, they are both companies are bleeding money and need to restructure and rethink some of their activities. Sony started this last year, emphasizing areas where they would make new investments (imaging being one of the major ones) while Panasonic hasn't yet given signs of what's going to be pushed and what allowed to wither. BTW, Sony's semiconductor business (including sensors) is one of their growth segments.

All this means is that for both companies the cost of money will go up for a while.

Michael
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Justinr
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« Reply #5 on: November 24, 2012, 01:09:37 AM »
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Let's not misinterpret this. Both companies are huge multinationals active in literally hundreds of different business. Both have suffered greatly in their TV business against the Koreans, but both have major operations that continue to be highly profitable.

Overall though, they are both companies are bleeding money and need to restructure and rethink some of their activities. Sony started this last year, emphasizing areas where they would make new investments (imaging being one of the major ones) while Panasonic hasn't yet given signs of what's going to be pushed and what allowed to wither. BTW, Sony's semiconductor business (including sensors) is one of their growth segments.

All this means is that for both companies the cost of money will go up for a while.

Michael

Aye, I think far too much store is set upon the musings of ratings agencies and I wouldn't be the first to point out that they are not always just disinterested spectators.
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niznai
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« Reply #6 on: November 28, 2012, 07:34:04 PM »
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Aye, I think far too much store is set upon the musings of ratings agencies and I wouldn't be the first to point out that they are not always just disinterested spectators.

I agree.

These ratings mean absolutely nothing for the companies themselves. I am not interested enough to even go back and check what said agencies said on the brink of the GFC about the companies that ruined the entire world, but am sure it would make for an interesting read (from a research point of view relevant to how much one can trust these agencies).

I think the only people interested in such dribble are money rich common sense poor playboys who don't know what to gamble their daddy's money next on.

Anyone who would visit Japan would find Panasonic and Sony are omnipresent literally everywhere. From laptops and mobile phones (yep, everything in Japan is a branded item, no "no name" junk on the shelves) and elevators/lifts in the mall to power lines on the Shinkansen railway. Both are vertically integrated giants and if push comes to shove I am sure the japanese people will just work harder for less pay to save them. Such is the psyche of the japanese. Not understandable in the west where feelings of entitlement come first but that's the way it is. Visit Japan if you want to see for yourself.

If my random choice of hobbies left me any cash sloshing about, I would buy Panasonic and Sony shares right now, thank you very much.
« Last Edit: November 28, 2012, 07:37:04 PM by niznai » Logged
Justinr
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« Reply #7 on: November 29, 2012, 03:39:37 AM »
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I agree.

These ratings mean absolutely nothing for the companies themselves. I am not interested enough to even go back and check what said agencies said on the brink of the GFC about the companies that ruined the entire world, but am sure it would make for an interesting read (from a research point of view relevant to how much one can trust these agencies).

I think the only people interested in such dribble are money rich common sense poor playboys who don't know what to gamble their daddy's money next on.

Anyone who would visit Japan would find Panasonic and Sony are omnipresent literally everywhere. From laptops and mobile phones (yep, everything in Japan is a branded item, no "no name" junk on the shelves) and elevators/lifts in the mall to power lines on the Shinkansen railway. Both are vertically integrated giants and if push comes to shove I am sure the japanese people will just work harder for less pay to save them. Such is the psyche of the japanese. Not understandable in the west where feelings of entitlement come first but that's the way it is. Visit Japan if you want to see for yourself.

If my random choice of hobbies left me any cash sloshing about, I would buy Panasonic and Sony shares right now, thank you very much.

I'm hopeless at remembering names so I won't mention any to save this site from being crushed under the legal might of the corporate colossus but there has been much seething at the ratings agencies in Europe. It seems that they were happily handing out triple A ratings to US banks up until it became just too obvious that they were in fact broke through dodgy lending and yet at the slightest sneeze in a EU economy the country was immediately downgraded and billions made on the stock markets by the currency traders betting against/upon the Euro's fall. There were even commentators unkind enough to suggest that the two were not unconnected which was hardly surprising given the money that could be made. Mind you, there is now loose talk about the impeccably virtuous Germany herself being downgraded at some point in the next couple of years and pleasingly enough there is a word in that language that covers such an  eventuality, schadenfreude.

Interesting point about branding by Japanese companies. A friend who used to work for Sony over here was telling me that Sony once had this ambition to create a lifestyle product range that would create and sustain a demand for it's products through customer loyalty to the name. The idea being that if you had a laptop it would be a Sony, a camera, it would be a Sony, music on the go - Sony again and so on.  Apple appears to have stolen their thunder here by producing new products rather than developing established ones and I think that may have much to do with their current woes.

Talking of Apple I see that their Chinese workers are demanding to be entitled to go to the loo and not kept in near prison conditions whilst producing all this lovely jubley Apple I Pod/Pad/Phone etc stuff.
« Last Edit: November 29, 2012, 03:41:31 AM by Justinr » Logged

jeremypayne
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« Reply #8 on: November 29, 2012, 06:36:18 AM »
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I agree ...

... These ratings mean absolutely nothing for the companies themselves ...

If my random choice of hobbies left me any cash sloshing about, I would buy Panasonic and Sony shares right now, thank you very much.

Wow, don't kid yourself.  Companies like Sony, Sharp, etc have tough roads ahead.  They are not going out of business any time soon, but they are in serious trouble.

About ratings ... You guys are a bit out of your depth on this.

There's a HUGE difference between ratings on corporate debt and corporations and ratings on structured financial products.  The former is their traditional strength and the latter is a much more recent business where they got in trouble as part of this crisis.

They are quite good at rating corporates and these kind of ratings mean a lot to these companies.  They impact access to short-term sources of capital and raise overall borrowing costs.

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Justinr
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« Reply #9 on: November 29, 2012, 10:08:04 AM »
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About ratings ... You guys are a bit out of your depth on this.


As are most politicians I would safely guess, but the currency traders also jump up and down at their whistle so do we assume that they to haven't a grasp on what the ratings mean either?
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jeremypayne
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« Reply #10 on: November 29, 2012, 10:12:58 AM »
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As are most politicians I would safely guess, but the currency traders also jump up and down at their whistle so do we assume that they to haven't a grasp on what the ratings mean either?

Currency traders? Now you would appear to be talking about sovereign ratings?

Here, the ratings agencies are truly irrelevant.
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Justan
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« Reply #11 on: November 29, 2012, 10:25:35 AM »
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Imo it is not wise to invest companies with poor stock valuations. That trend typically implies that the company is over leveraged. There are way too many top performers to justify tossing investment dollars at crap.

That does not suggest or imply that the products themselves are bad, but that the companies financial organization needs a lot of work.
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Adam L
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« Reply #12 on: November 29, 2012, 11:03:28 AM »
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Ratings agencies are not irrevalant.  Just as Michael said their cost of money will increase.  This will translate into a higher cost of doing business.  It may make some investments no longer appealing to Sony or would delay the onset of new investment.   It's real.  It has a real market effect and a real business effect.
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jeremypayne
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« Reply #13 on: November 29, 2012, 12:04:53 PM »
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... companies with poor stock valuations ...

The rating agencies are NOT rating the stocks ... they are - in effect - giving a probability of debt default ... or the probability of 1st dollar loss on principal ... depends who you ask.

That said, the stock recommendations for Sony, Sharp and Panasonic ain't so great either.

Sony ... YTD Return: -41% | 2 Buys, 11 Holds and 4 Sells from 17 analysts
Sharp ... YTD Return: -75% | 0 Buys, 9 Holds and 13 Sells from 22 analysts
Panasonic ... YTD Return: -39% | 6 Buys, 12 Holds, 3 Sells from 21 analysts
 
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Justinr
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« Reply #14 on: November 29, 2012, 03:13:17 PM »
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Currency traders? Now you would appear to be talking about sovereign ratings?

Here, the ratings agencies are truly irrelevant.

Oh if only that were the case. Over here in Europeland it is the downgrading of countries economy's that have pushed up interest rates that states can borrow at and jiggled the value of the Euro around causing great misery in many countries. Greece is the prime example but Ireland is is also corkscrewing down into oblivion. True, we don't hear quite so much about the reptiles as we did a year or so back hopefully because various governing bodies have got wise to their game and now pretty much ignore their entrails and beads.
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jeremypayne
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« Reply #15 on: November 29, 2012, 03:30:01 PM »
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Oh if only that were the case. Over here in Europeland it is the downgrading of countries economy's that have pushed up interest rates that states can borrow at and jiggled the value of the Euro around causing great misery in many countries. Greece is the prime example but Ireland is is also corkscrewing down into oblivion. True, we don't hear quite so much about the reptiles as we did a year or so back hopefully because various governing bodies have got wise to their game and now pretty much ignore their entrails and beads.

... if you think the problems faced by Greece and Ireland and other European nations were in any way shape or form caused by anything that a ratings agency said ... then you are smoking crack.

You can't really seem to stay on topic.  We were talking about corporations and corporate ratings ... specifically Asian consumer electronics conglomerates ... not really sure what that has to do with Europe.
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Justinr
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« Reply #16 on: November 29, 2012, 03:56:00 PM »
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... if you think the problems faced by Greece and Ireland and other European nations were in any way shape or form caused by anything that a ratings agency said ... then you are smoking crack.

You can't really seem to stay on topic.  We were talking about corporations and corporate ratings ... specifically Asian consumer electronics conglomerates ... not really sure what that has to do with Europe.


No, I've not said that they are the basic cause, please don't put words in my mouth. what kicked it all off can be argued about from here to eternity. What I have said is that the downgrading of various counties credit ratings pushed up the rates that they were able to borrow at, further damaging the prospects of recovery and since I am having to live with the consequences I can assure that I have taken some interest in the matter. One of the side effects was to cause fluctuations in the value of the Euro against other currencies and where there is movement in the market there is money to be made.

I only mentioned their larger influence as a matter of general interest, giving some context to their sphere of operation. I have also written about the marketing strategy of Sony so if you want to stay on topic then why don't you take note of that?
« Last Edit: November 29, 2012, 04:30:02 PM by Justinr » Logged

jeremypayne
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« Reply #17 on: November 29, 2012, 05:46:42 PM »
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Justin ... you really don't know what you are talking about ... you just make shit up.

Let's look at Ireland's ratings from S&P and the rates they can borrow at.

Ireland was rated AA- in 1989.  It was bumped up to AA in 1995, AA+ in 1998 and AAA in 2001.  

Were you praising S&P during this time?

On March 24th, 2009 the auction yield on 10 Year Irish Debt was 5.8%

On March 30th, 2009 Ireland was downgraded to AA+.

On April 24th, 2009 the auction yield on 10 Year Irish Debt was 5.1% ... yields fell after the downgrade ... huh ...

On June 8th, 2009 Ireland was downgraded to AA.

On August 18th, 2009 the auction yield on 10 Year Irish Debt was 4.55% ... yields fell after the downgrade ... huh ...

On August 24th, 2010 Ireland was downgraded to AA-.

On August 17th, 2012 the auction yield on on Irish Debt was 5.4% ... rising ... but still 40bp lower than when they were AAA rated.

What was that you were saying again about ratings and borrowing costs?
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Justinr
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« Reply #18 on: November 30, 2012, 02:44:26 AM »
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Justin ... you really don't know what you are talking about ... you just make shit up.

Let's look at Ireland's ratings from S&P and the rates they can borrow at.

Ireland was rated AA- in 1989.  It was bumped up to AA in 1995, AA+ in 1998 and AAA in 2001.  

Were you praising S&P during this time?

On March 24th, 2009 the auction yield on 10 Year Irish Debt was 5.8%

On March 30th, 2009 Ireland was downgraded to AA+.

On April 24th, 2009 the auction yield on 10 Year Irish Debt was 5.1% ... yields fell after the downgrade ... huh ...

On June 8th, 2009 Ireland was downgraded to AA.

On August 18th, 2009 the auction yield on 10 Year Irish Debt was 4.55% ... yields fell after the downgrade ... huh ...

On August 24th, 2010 Ireland was downgraded to AA-.

On August 17th, 2012 the auction yield on on Irish Debt was 5.4% ... rising ... but still 40bp lower than when they were AAA rated.

What was that you were saying again about ratings and borrowing costs?


Sigh.

Meanwhile the 10 year German bond yield is 1.38% and the Euro central bank rate is 0.75%. Ireland is paying nearly four times as much as Germany to borrow money.

 http://www.bloomberg.com/

Everything is relative.

« Last Edit: November 30, 2012, 03:02:00 AM by Justinr » Logged

kikashi
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« Reply #19 on: November 30, 2012, 05:18:38 AM »
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Sigh.

Meanwhile the 10 year German bond yield is 1.38% and the Euro central bank rate is 0.75%. Ireland is paying nearly four times as much as Germany to borrow money.


Well, of course it is. Ireland's economy is in desperate straits and Germany's isn't (yet). What does that have to do with ratings agencies?

Jeremy
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