Most economists will agree that you have to spend money to make money, but the trick is not to go overboard with the former. It's a balancing act Sony
finds itself in at this very moment, having spent $1.8 billion in just the last three months acquiring companies and assets, such as buying a 51 percent stake in Olympus
for $645 million just weeks ago. Should Sony's investors be worried?
That depends on what happens next for Sony. Desperate times call for desperate measures, and for Sony's fiscal year ended March 31, the electronics maker revealed a 9.6 percent slippage in revenue compared to one year ago. Sony's fiscal-year loss reached a record $5.55 billion, which means it was the worst year in the history of the company, and now it's spending like gangbusters just months later.
Image Source: Flickr (JayBuffington)
There's a sense, as Reuters
points out, that Sony is running out of both time and money. If Sony's not careful, it could end up in the same situation as Sharp, which just received a hefty bailout from banks that totaled $4.6 billion. In fact, that happened the same day Sony agreed to spend nearly three quarters of a billion dollars on Olympus.
"As we do these acquisitions, we are very mindful of our cash position," Sony CEO Kazuo Hirai said. "We have done a lot in terms of realigning our portfolio over the last six months."
Diversifying its portfolio might not be such a bad thing. It's proving tough to compete in the console market, which is further threatened by the rise in tablet and smartphone sales, of which Sony is a minor player at best.