Sony - group bonding

Bonds of two kinds have produced good things for Sony SNE Mr Bond latest outing in Skyfall, on course to be the most lucrative film in the spy franchise, will be a nice earner for Sony Pictures. And its parent latest convertible bond, issued this week, netted the company Y150bn, or USD 1.8 billionn. But while Skyfall premiere in Tokyo next week will produce some good publicity, the financial kind of bond is sending very negative signals.

James Bond never needed to do bond maths but Sony's shareholders do not get that luxury. Its zero-coupon convertible bonds were its first such debt in almost a decade. The bonds can be converted to shares at Y957, a 10 per cent premium to Wednesday's close, any time in the next five years from mid-December.

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Sony shares however fell almost 9 per cent on Thursday to Y793 in by far the heaviest day of trading the company has seen. But the fall should have been half as bad again, taking the shares to Y753 all else being equal, if it were to have fully reflected expectations that the bonds would be converted. The result instead suggests that investors are not very sure that Sony can even lift its shares to a point where it makes more sense to take a punt on future profitability than to hold an IOU that does not even offer interest.

Sony's troubles are well known, as are those of Sharp and Panasonic, its rivals. Its finances are at least on a somewhat sounder footing, thanks to its film, music, gaming and financial services units. But all the efforts of Mr Bond or even Sony's new film signing, the boyband One Direction, will not convince investors a corner has been turned until its electronics business produces its equivalent of a Skyfall-sized hit - a best-selling phone or tablet. Until then, Mr Bond will continue to make miraculous recoveries from disaster-laden scenarios, but Sony's shares are unlikely to follow suit.