Sony to invest $4 billion getting sensitive

DawsonCryingSony thinks it might be able to invest its way out of trouble by investing $4 billion from new shares and bonds into image sensors.

The move is seen as Sony attempting to re-invent itself out of the consumer goods market which TVs that dragged it into losses.

It is the first new share issue in 26 years, and will raise $2.62 billion from a public stock offering. It will raise the rest from a bond issue to fund a boost in sensor output capacity at its plants in Japan.

The deal is worth close to a tenth of its current market value, and provides the clearest signal yet that Chief Executive Kazuo Hirai is prioritising the sensor business to anchor Sony’s turnaround.

The image sensors, a key high-tech component in digital cameras and smartphones, have emerged as one of Sony’s strongest lines alongside its PlayStation videogames unit, helping the company recover from a long slide in TV and smartphone sales.

Sony is only just emerging from decline making loses last year. It expects a profit of 140 billion yen in the current year.

The move caught investors by surprise on Tuesday, with fears the new stock will dilute per-share earnings sending the stock 8.3 percent lower at the close. Yet the company’s market value has climbed in step with its recent recovery progress, and has more than doubled since June 2014 to close to $35 billion.

Developing sensors requires a consistently heavy drain on capital expenditure with Sony’s balance sheet already stretched as it restructures, selling or splitting off loss-making operations and slashing jobs.

Sony had previously mentioned smaller-scale commitments to expand in sensors so the move was not that surprising.