Sony Corp (ADR) (NYSE:SNE) recently announced plans to raise $3.6 billion through the issue of shares and convertible dividends.
The announcement seems to have been met with mixed feelings especially by the company’s investors. Following the announcement, the company’s shares dropped by more than 8% on Tuesday after climbing by 40% this year. The company plans to raise $3.6 billion (440 billion yen) through the issue of convertible bonds and common stock. The funds will be used to boost the production of image sensors for smartphones.
The announcement opened doors for the company’s first share sale in roughly 26 years. Sony announced that its shares had been on a low since September last year after doubling the value. The company has been having a hard time trying to maintain profits. The company’s CEO, Kazuo Hirai has been hard at work trying to reverse the negative trends. He recently oversaw the restructuring of the business to place more focus on the most profitable areas such as entertainment, Gaming and image sensors.
Investors seem to have little faith in Mr. Hirai’s decision to raise the funds. They feel that the timing is wrong because the company can still push more growth. Mitsushige Akino, the CEO of Ichiyoshi Asset Management Co. stated that the company should have held off until revenues grow strong enough to indicate that growth is on track. He also said that the company has not always been sincere on its promises, and this might make it hard for the market to respond the way they expect.
An analyst at BNP Paribas by the name Masahiro Wakasugi the firm’s shares will most likely respond negatively to the announcement. Sony also announced that it will increase its investment in semiconductors by three times the regular average. The investment will top off at $290 billion in the current year to cater for the increasing demand for sensors used by Samsung Electronics Co. and Apple Inc. (NASDAQ:AAPL) for their smartphones.