Any Hope For Sony?

Nov. 2.11 | About: Sony Corporation (SNE)

Sony's (NYSE:SNE) latest loss, and the company's weak response to it, should have investors streaming for the exits.

But while you're leaving you might want to consider an option to get in later, and lower, because there really are some high quality assets here.

Years before the iPhone was a gleam in Steve Jobs' eye, Sony was pushing the idea of synergy between content and devices. Even before Rupert Murdoch began buying up TV stations as multiplexes for his movies, Sony was seeking to control its distribution.

The dream of founder Akio Morita was that you would watch a Sony TV show on a Sony TV, listen to Sony Music on a Sony Walkman, play a Sony video game on a Sony player. The content side of that dream has come true, but it is constantly having to pay taxes, in the form of minimized investment and growth opportunities, to the product side of the house.

  • Sony Music is the leading label in the U.S., having passed Universal Music earlier this year.

  • Sony represents about 13% of the movie industry with such recent hits as the Spider Man series, the Da Vinci Code, and Hancock.

  • Sony Pictures Entertainment has 25 TV shows on right now across the U.S. and is a leader in other markets as well.

  • Sony has 27% of the video game console market and 32% of the portable game player market. The best-selling title right now is a Batman title for Playstation 3.

  • While it's not one of the top five PC brands, Sony's growth in the space has recently been above the market average.

The problem is that you can be too early to hit a trend as well as too late. Sony has always been way too early. What it needed to tie all this together was an Internet presence that could sell content tied to its players, and that third-parties would also find a compelling channel.

Instead the company was forced to rely on traditional consumer electronic stores for its sales and to rely on third parties to sell its content as well. It is now starting to create such sales channels, but only in smaller markets like Australia.

Sony has proven far too bureaucratic, in general, to take advantage of its advantages. Now, with floods in Thailand hitting its results hard, may not seem like the right time to sell. But there is little indication the company could even get back to these levels any time soon, and you don't want your money under water.

But if you want to bet on the company finally getting its act together, consider some options to buy at lower prices. An event like a corporate break-up, or hiring someone who understands the Internet might bring the company back at some point.

But your money has better things to do than wait.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.