Jefferies Comments On Sony's Restructuring Efforts

Jefferies commented on the Sony Corp (ADR) (NYSE: SNE) restructuring plan Wednesday. The firm maintained a Buy rating and a $29.80 price target.

Analyst Atul Goyal wrote he liked “Sony's ongoing restructuring efforts, led by CFO Ken Yoshida” and highlighted three moves by the company.

1. "Selling stake in its logistics business – allows it to focus on core and to bring in cash. Sony will sell its 66 percwent stake in subsidiary SSCS-J to Mitsui-Soko for ¥18b (implied PER of c. 30x). We believe companies do well when they focus on fewer business lines and particularly when they need to turn around."

2. "Reexamining strategy of tablets in the mid-term. Hiroki Totoki, CEO of Sony Mobile, recently told media that Sony's tablet does not have presence outside Japan and is not competitive in terms of price or features. The tablet business accounts for <5 percnet of Sony Mobile revenues. We like Mr. Totoki’s grounded and forthright view of Sony’s position, which also is a clear signal for what lies ahead."

3. "Redeeming convertible bonds – 1.3 percent positive EPS impact. Sony will redeem outstanding CBs due 2017 (issued Nov 30, 2012, total amount ¥150b, CP ¥957; as of 17-Dec-2014 outstanding bonds c. ¥14.46b). Earlier we assumed full dilution, but now this redemption will reduce total o/s shares by c. 1.3 percent (equivalent to 15.1m shares based on ¥957 CP) and increase EPS by 1.3 percent."

Sony recently traded at $21.32, up 2.21 percent.