September 21, 2014, 12:32:02 AM

Author Topic: Is Sony junk....  (Read 6631 times)

mackguyver

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Re: Is Sony junk....
« Reply #30 on: January 30, 2014, 02:03:27 PM »
I can't speak for their stock, but the last several Sony products I've bought have been junk.  Two of them died on days 91 and 93 of their 90-day warranty...  They Sony of my childhood seems to no longer exist.

Also, BTW, did you know that their most profitable business is selling insurance (domestically in Japan).  That's definitely not the home of the Walkman!
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Re: Is Sony junk....
« Reply #30 on: January 30, 2014, 02:03:27 PM »

Sella174

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Re: Is Sony junk....
« Reply #31 on: January 30, 2014, 03:17:23 PM »
Also, BTW, did you know that their most profitable business is selling insurance (domestically in Japan).

And obviously they don't underwrite the warranties on their own products.  ???
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docsmith

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Re: Is Sony junk....
« Reply #32 on: January 30, 2014, 03:38:12 PM »
The power of labels is funny.  Moody's didn't rate Sony as "junk."  They down graded their rating of Sony BONDS by one step, out of 23 steps.  The step just happened to drop Sony's rating from the lowest "investment" grade to the highest "speculative" grade.  There are still 10 steps below Sony's current "Ba1" grade. 

The primary functions of these ratings are to given investors looking to buy bonds a sense of the risk that the investor may be taking on that the company (Sony) won't be able to pay back that bond and to help set the rate of return/yield/interest that will attract investors.  This is as much about comparisons as absolutes so that investors know that Sony bonds are about the same risk as bonds from company XX or more risky than company YY. 

And speculate about Moody's all you want...but, given Sony's debt and recent financial losses, would you buy Sony debt for a very low interest rate?  Or is the chance that they may default/go into bankruptcy enough that you may want more of a return on your investment to justify the risk.  That is all this is. 

"Junk" is just a label that makes for good press.
« Last Edit: January 30, 2014, 05:24:49 PM by docsmith »

unfocused

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Re: Is Sony junk....
« Reply #33 on: January 30, 2014, 04:20:15 PM »
"Junk" is just a label that makes for good press.

Exactly. "Junk Bond" is a term created by the media. No rating agency labels bonds as "junk."

And, you are absolutely correct, it serves as only a guide to investors. In fact, depending on market conditions, bonds that have a lower rating may sometimes sell with less interest than bonds that had a higher rating sold for just six months prior.
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jrista

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Re: Is Sony junk....
« Reply #34 on: January 30, 2014, 07:45:37 PM »
The power of labels is funny.  Moody's didn't rate Sony as "junk."  They down graded their rating of Sony BONDS by one step, out of 23 steps.  The step just happened to drop Sony's rating from the lowest "investment" grade to the highest "speculative" grade.  There are still 10 steps below Sony's current "Ba1" grade. 

The primary functions of these ratings are to given investors looking to buy bonds a sense of the risk that the investor may be taking on that the company (Sony) won't be able to pay back that bond and to help set the rate of return/yield/interest that will attract investors.  This is as much about comparisons as absolutes so that investors know that Sony bonds are about the same risk as bonds from company XX or more risky than company YY. 

And speculate about Moody's all you want...but, given Sony's debt and recent financial losses, would you buy Sony debt for a very low interest rate?  Or is the chance that they may default/go into bankruptcy enough that you may want more of a return on your investment to justify the risk.  That is all this is. 

"Junk" is just a label that makes for good press.

Yes, "Junk" is just a colloquial term which does make for good press, however it is also used in unofficial investment nomenclature. Junk refers to non-investment grade ratings. Because Sony is now Ba1, they are no longer a "prime" investment. There are three classes of prime investments and prime credit: Triple As, the As, and the triple Bs (or, in the case of Moodys odd nomenclature, Baa{n}.) Sony is now a Ba1/BB+ rating, which takes it out of the prime investment category, and classifies it as NON-investment. In other words...STEER THE HELL CLEAR, VERY HIGH RISK! The rewards can be very great, but the chances are also very great that instead of being rewarded, you'll lose whatever you invest in non-prime (i.e. junk) rated investments.

Junk is a very appropriate term. That's why it's been used to describe this class of non-investment worthy funds for decades.
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docsmith

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Re: Is Sony junk....
« Reply #35 on: January 30, 2014, 09:16:10 PM »
Yes, "Junk" is just a colloquial term which does make for good press, however it is also used in unofficial investment nomenclature. Junk refers to non-investment grade ratings. Because Sony is now Ba1, they are no longer a "prime" investment. There are three classes of prime investments and prime credit: Triple As, the As, and the triple Bs (or, in the case of Moodys odd nomenclature, Baa{n}.) Sony is now a Ba1/BB+ rating, which takes it out of the prime investment category, and classifies it as NON-investment. In other words...STEER THE HELL CLEAR, VERY HIGH RISK! The rewards can be very great, but the chances are also very great that instead of being rewarded, you'll lose whatever you invest in non-prime (i.e. junk) rated investments.

Junk is a very appropriate term. That's why it's been used to describe this class of non-investment worthy funds for decades.

Agreed....it was a one step decrease in the rating that when from investment to "speculative."  It certainly isn't a good thing....but I bet most investors see it not as black and white...AAA or Junk....but as something that was already risky to something that has even more risk....

jrista

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Re: Is Sony junk....
« Reply #36 on: January 30, 2014, 09:23:22 PM »
Yes, "Junk" is just a colloquial term which does make for good press, however it is also used in unofficial investment nomenclature. Junk refers to non-investment grade ratings. Because Sony is now Ba1, they are no longer a "prime" investment. There are three classes of prime investments and prime credit: Triple As, the As, and the triple Bs (or, in the case of Moodys odd nomenclature, Baa{n}.) Sony is now a Ba1/BB+ rating, which takes it out of the prime investment category, and classifies it as NON-investment. In other words...STEER THE HELL CLEAR, VERY HIGH RISK! The rewards can be very great, but the chances are also very great that instead of being rewarded, you'll lose whatever you invest in non-prime (i.e. junk) rated investments.

Junk is a very appropriate term. That's why it's been used to describe this class of non-investment worthy funds for decades.

Agreed....it was a one step decrease in the rating that when from investment to "speculative."  It certainly isn't a good thing....but I bet most investors see it not as black and white...AAA or Junk....but as something that was already risky to something that has even more risk....

Sure, it isn't like it went from AAA to Junk in one move. However, dropping from Baa2 to Baa3 is less hazardous to a fund than dropping from Baa3 to Ba1. There is that additional line that is being crossed...simultaneously Sony went from being prime to being non-prime. That makes the one-step move from Baa3 to Ba1 more meaningful than the move from Baa2 to Baa3. Hence the reason it's made a rather obvious ripple in the media...it's a move that has more significance than any other prior move, even more significant than when it went from A class to B class.
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Re: Is Sony junk....
« Reply #36 on: January 30, 2014, 09:23:22 PM »

dilbert

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Re: Is Sony junk....
« Reply #37 on: January 30, 2014, 11:10:55 PM »
In the past, didn't Moodys also rate General Motors as junk?
And Ford?

Hillsilly

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Re: Is Sony junk....
« Reply #38 on: January 30, 2014, 11:15:54 PM »
I can't speak for their stock, but the last several Sony products I've bought have been junk.  Two of them died on days 91 and 93 of their 90-day warranty...  They Sony of my childhood seems to no longer exist.

A 90 days warranty seems quite short?  I don't know the source of Sony's financial problems, but I've always had a high opinion of Sony products.  Around my place, we've got a wide collection, including audio recorders, clocks, a tv,  PS3, a blu-ray player and I'm sure there is more.  I've never had a problem with any of it. 

But I understand what you are saying.  When I was younger, Sony had a reputation as being one of the best quality manufacturers - with pricing to match.  I've got a strong recollection of never being able to afford their gear.  Now, their pricing makes them a lot more accessible and cost cutting must have taken its toll.  Still, I'd have no hesitation buying Sony.
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jrista

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Re: Is Sony junk....
« Reply #39 on: January 31, 2014, 12:05:23 AM »
In the past, didn't Moodys also rate General Motors as junk?
And Ford?

Aye, they did. And, both companies deserved the rating at the time! Both companies worked their ASSES off, GM even wrote down some 46 BILLION in deferred taxes, to get their ratings back up. Ford still doesn't make the greatest cars, for that matter neither does GM, however I did gain a lot of respect for Ford for not taking a government bailout. If a junk rating is deserved, it should be given. If Sony turns themselves around, restructures themselves into a better, more reliable, and most importantly profitable corporation, then their credit rating should improve. If they do not, however, their credit rating will continue to degrade.

What might happen in the future doesn't play a role in what their rating should be right now, though. And what happened to other companies that have been rated junk in the past has absolutely no bearing on what Sony should be rated right now.
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CarlTN

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Re: Is Sony junk....
« Reply #40 on: February 17, 2014, 05:39:58 AM »
Interesting discussion.  I don't profess to know a lot about a company's bonds.  However, I notice that in the past 3 months or so, SNE's share price has averaged mid-way between its 52 week high and low.  These are not huge swings in price...so investors must not think they will see Sony's demise anytime soon.  Certainly there was a low point when the news broke, but the share price was still significantly above SNE's 52 month low.

Compare this with say, Tesla Motors.  In the past 3 months, the share price has doubled.  This looks like the very definition of "froth", not to mention some market manipulation.  Is this company really poised for organic revenue growth?  I don't see how.  At some point the wealthy decide they own enough glorified golf-carts...

It's interesting that in the above discussion, the "junk" status was referred to in the debts of countries, specifically the USA and some countries in Europe.  It's a shame we in the USA can't get a handle on our debt, but frankly I see it spiraling out of control.  If $9 trillion of debt was "unpatriotic", what is $17 or $18 trillion?  It spells certain doom...
« Last Edit: February 17, 2014, 05:13:14 PM by CarlTN »

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Re: Is Sony junk....
« Reply #41 on: February 17, 2014, 07:50:39 AM »
I can't speak for their stock, but the last several Sony products I've bought have been junk.  Two of them died on days 91 and 93 of their 90-day warranty...  They Sony of my childhood seems to no longer exist.

A 90 days warranty seems quite short? 

In the EU those same Sony products have a 2 year warranty, and are required to do so by law.

I am not aware of any evidence to suggest that Sony products consistently fail within their warranty period.

But I bet there are lots of similar stories claiming Sony products fail on day 731...  (or 732 if there was a leap year  :))

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Re: Is Sony junk....
« Reply #41 on: February 17, 2014, 07:50:39 AM »