Sony Corp. shares dropped the most in four years after reporting an eighth consecutive quarter of losses, an unpleasant surprise for investors who borrowed money to buy the stock on bets the weaker yen would help turn around Japan’s biggest exporter of consumer electronics.
A 59 percent jump this year by the maker of PlayStation game consoles helped drive the number of the shares being held in margin accounts to a 13-year high, according to data compiled by Bloomberg. The accounts held 5.48 million shares as of yesterday, the most since March 2000, the data show.
Sony shares slumped 10 percent to close at 1,365 yen, the biggest decline since November 2008. The company’s 150 billion yen ($1.6 billion) of convertible bonds due in 2017 fell the most since November, sliding 8.8 percent to 147 yen per 100 yen in face value, according to Nomura Holdings Inc.
“Speculators who have been rushing to buy Sony on expectation that the weakening yen will turn the earnings around must be disappointed,” said Mitsushige Akino, Tokyo-based chief fund officer at Ichiyoshi Asset Management Co., which oversees about $356 million. “They will close their positions to take profits or minimize losses.”
Sony rebounded 92 percent through yesterday from a 32-year low on Nov. 15. Japan’s exporters have rallied on speculation earnings will improve on the weaker yen, said Amir Anvarzadeh, a Singapore-based manager for Asia equity sales at BGC Partners Inc.
The Japanese yen slid in the last four months, the longest streak of monthly losses since August 2008. The currency has retreated about 14 percent against the dollar since elections were announced Nov. 14 amid speculation new Prime Minister Shinzo Abe would take aggressive steps to fight deflation.
“Some of the hedge funds have been accumulating long positions on the back of speculation that Sony will be turning things around,” BGC’s Anvarzadeh said. “That quick, hot money is going to sell out. I don’t believe Sony is going to turn around soon.”
Unlike its rivals, the currency’s weakness hasn’t been enough to reverse Sony’s losses. The maker of Bravia televisions posted a loss of 10.8 billion yen, missing the average estimate for a 21 billion-yen profit from three analysts surveyed by Bloomberg. Panasonic Corp. posted surprise net income of 61 billion yen in the three months ended December, while Sharp made its first operating profit in five quarters.
Sony is counting on new products to lure consumers away Samsung Electronics Co.’s Galaxy devices and Apple Inc.’s iPads and iPhones. At last month’s Consumer Electronics Show in Las Vegas, the company introduced higher-definition TVs, water-resistant Experia smartphones and a more-powerful digital camera. Sony has announced a PlayStation event for Feb. 20, stoking speculation the company will unveil the fourth generation of the gaming console.
“We need to see how these products perform before investing money back in Sony,” said Yuuki Sakurai, president of Fukoku Capital Management Inc., which oversees $19 billion. “Sony still has not shown us how it will fight with Samsung or Apple.”