Sony’s Struggles Continuing

Sony Corporation (SNE) is one of the world’s leading players in both the electronics and entertainment industries. Established in 1946 in Tokyo, Japan, the company manufactures and globally markets a diversified range of products from video and audio equipment to computer games, CDs and movies.

We believe Sony will continue to struggle as it faces competition from other innovative digital products and from low-cost Asian manufacturers as the consumer market slows. Sony posted lackluster Q3 results, hurt by sluggish sales in its core electronics segment due to the ongoing recession.

A strong yen, weak consumer demand, sliding consumer spending and an intensifying price competition are eating into its profits. Sony Corp. trimmed its forecast for 2008 and expects to record its first net loss in 14 years with much lower operating income. We therefore maintain a Sell recommendation on Sony shares and cut our six-month price target to $16.50.

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