Sony (SNE) now has less cash than a quarter's sales.
Technology companies keep a lot of cash and investments for a reason, to tide them over in bad times, and to fuel turnaround strategies. When the cash starts to run out, however, that's a clear sign that we're no longer talking about a turnaround.
And Sony is a lot closer to living on cash fumes than you might imagine. The company hasn't made an annual profit since George W. Bush was President. It no longer even has operating margins.
In Japan the stock is now trading at under 1,000 yen/share, which is $12.65 for the U.S. ADR. Kazuo Hirai's turnaround plan for the company has yet to show any results.
Sony is stuck in a TV business whose margins are wafer-thin on good days, and whose flat panel displays don't have to be replaced every few years the way CRTs do. Its PS3 line of video game machines now trail both Nintendo and Microsoft Xbox in total market share, and Hirai's big success was in that area.
I wrote in April that Sony might sell its movie and TV studio and that studio is still doing well, trailing only Disney's BuenaVista in box office market share so far this year. But even the studio is sort of running on fumes - two of its biggest hits are remakes of a TV show (21 Jump Street) and an earlier hit (Men in Black III).
There is a point in the life of every technology company's lifecycle where you go from turnaround mode to survival mode. At that point it's usually too late to do much of anything. The TV business is going to draw Sony under unless it makes a really, really big move, and soon. But there is nothing in its corporate culture or history to indicate the company can do that.
Oh, and what would I do? Find a way to spin-out the Sony brand name to a Chinese company, sell the studio, and put everything on innovating in video games, which is where CEO Hirai made his reputation.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.