April 13, 2007
The Thinner the Higher the Stock Price Right: Sony (SNE)
The thinner an object, the less the mass; less mass means higher potential to float; unlike a sheet and some hot air, Sony’s new 1.4 mm thin organic electroluminescent (OEL) screens do not require the hot air to rise. In an announcement yesterday, Sony unveiled its new 11 inch OEL models that should enter the Japanese markets next year. This schedule puts Sony ahead of the entire market and specifically competitors Toshiba and Sharp, both of which made an embarrassment out of Sony with entering the LCD market.
-Less energy for use, therefore less heat produced.
-Quicker response than LCD, thus better for computer and high definition purposes.
-Thinness means more mobile with less space and weight.
Acceptability in the Market
OEL’s are already entering and to some extent commonly used in laptops, cell phones and PDA’s. The current model is relatively small at 11-inches, but larger models are on schedule for production in high and low-resolution for 2009.
Translation to Stock Price
Never buy any company because of just one product, but OEL’s are a line of products and a future standard in the industry. Combined with the growing appeal of the Wei and a recovery in Sony’s laptop sales, Sony does have a decent product mix for the next three to five years. Looking at stock performance, 52-week change of only 15.77%, combine with institutional ownership of 15.60% and debt to equity ratio of 0.394 indicates strong potential for future growth. Also as a value play, Sony (SNE) has a payout ratio of 21%. These are all strong reasons to look for an entry point into Sony.
Posted by jwbir at April 13, 2007 01:15 AM