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Sony Corp. announced Friday its first ever 100 billion yen ($ 910 million) stock buyback, which allowed its stock to recover somewhat after the hammering that occurred. she had suffered earlier this week when the tech company announced poor results.
This announcement marks Japan's second major takeover this week after technology investor SoftBank Group Corp announced its intention to buy back Wednesday worth 600 billion yen, which would rock its share price.
Both stocks were under pressure ahead of announcements, reflecting investor discomfort over the outlook for the global technology sector in the face of declining demand in China.
Sony said its takeover, its very first goal to improve shareholder returns, will equate to 2.36% of its outstanding shares and will run until March 22nd.
"Our financial health has improved enough to allow redemptions," said a spokesman for Sony, adding that recent stock prices were also a factor in his decision.
Hiroyasu Nishikawa, senior badyst at IwaiCosmo Securities, said the buyout showed how Sony has changed over the years, reacting more to shareholders.
"This announcement took place at a convenient time and shows that they are watching the market very well," he said. "Sony has been gradually restored in recent years."
A few years ago, Sony was struggling with losses as its consumer electronics business lost market share at the expense of its Asian rivals. Since then, she has reinvented herself as an entertainment company with stable revenues from music content and games.
But its shares plunged 14% this week to their lowest level in more than a year after the company announced a profit below expectations, while its previously flourishing game business was sinking – although a gain However, the one-time deal with its acquisition of EMI pushed the group to a quarterly result at a record level.
Sony has also reduced its profit outlook for imaging sensors, due to the weakness of the global smartphone market.
Buyback announcements are also occurring as Japanese companies increase their share buybacks as more and more calls demand better returns for shareholders. Instrument maker Yamaha Corp and trading company Itochu Corp also announced buybacks with their quarterly results last week.
Sony has consistently increased returns for its shareholders through higher dividends over the past two years. It paid out 7.09% of its earnings in the form of a dividend last year, compared to 22.5% for the US giant Apple Inc, according to data from Refinitiv.
© (c) Copyright Thomson Reuters 2019.
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