UPDATE: Sony Plans Y100 Billion Bond Offering In June - Source
12 May 2009 - 5:13PM
Dow Jones News
Sony Corp. (6758.TO) will tap capital markets to raise more than
$1 billion in fresh funds for investment and bond redemption next
month as the struggling electronics maker grapples with a slide in
global consumer spending that's pushing it to its first net loss in
14 years.
Sony, home of the PlayStation video game console and the Walkman
music player, plans to offer Y100 billion of corporate bonds via
three-, five- and 10-year tranches in early June, a person close to
the deal said Tuesday.
Nomura Securities, Nikko Citigroup, Mitsubishi UFJ Securities
and Mizuho Securities will jointly lead manage the deal, the person
said.
A Sony spokesman said the company has decided to issue corporate
bonds to raise funds for investment and to repay part of an
existing bond issue that's set to mature in March 2010. He declined
to provide further details.
Sony is expected report it swung deep into a net loss for its
fiscal year ended March when its releases results Thursday. It has
already announced plans to cut as many as 16,000 jobs from its
global work force in an effort to trim billions of dollars from its
cost base. The company has forecast a net loss of Y150 billion for
the 12 months ended March.
While Sony Tuesday declined to comment on where it might invest
some of the money it raises, analysts say it's likely that the
unprofitable Sony Ericsson mobile phone business - a joint venture
with Sweden's LM Ericsson Telephone Co (ERIC) - may need fresh
capital before long as it tries to target new customers in markets
like the U.S., China and India.
Sony Ericsson urgently needs to revamp its phone lineup to boost
sales and margins and return the company to profitability, industry
experts say.
Last month, Sony Ericsson announced plans to shed 2,000 jobs
from its global work force of around 10,000 by mid-2010 after weak
customer demand and destocking by retailers pushed it to a
first-quarter loss of EUR293 million.
Ericsson has said it's prepared to inject cash into the
struggling venture if needed, while Sony has said it also remains
committed to the venture.
Sony's shares closed 3% lower Tuesday at Y2,615, while the
Nikkei index ended the day down 1.6%. The stock traded in a narrow
range through the session in Tokyo, with investors bracing for
fiscal year earnings which some analysts fear could be even worse
than Sony's own forecasts.
Like much of Japan's export-dependent technology industry, Sony
has seen the value of its exports undercut by the recent strength
of the yen versus currencies like the dollar and the euro.
It's also been hit by recession in major markets for its TVs,
digital cameras and mobile phones as increasingly budget-conscious
shoppers curtail spending plans.
Widely credited with creating the portable music-player market
with the Walkman, Sony has yet to field a strong challenger to
Apple Inc.'s smash-hit iPod. Sony's PlayStation videogame console
has been losing out in the long run to models from Nintendo Co. and
Microsoft Corp., and it faces stiff competition in the television
and personal-computer markets.
In an effort to speed up attempts to revive the company's
fortunes, Chief Executive Howard Stringer is taking fuller control
of the company, adding the title of president and appointing
younger executives to key management positions.
-By Megumi Fujikawa and Kenneth Maxwell, Dow Jones Newswires;
813-6895-7559; megumi.fujikawa@dowjones.com
(Yuzo Yamaguchi contributed to this article)