#Xbox and #PS4 dogfight will exhaust each other. Situation ripe for a massive disruption. $SNE, $MFST, $AAPL, $GOOG,

Sony and Microsoft have launched their gladiator proxies in the forms of Xbox and PS4. Sales since launch seem to be even on a global basis. Brand loyalty is strong. No signs of any major defections. The product narratives are holding.

Consider this. Race fans will recognize the set up. Two strong horses running neck and neck fighting for every inch. The adrenaline surges, surges and then surges some more. One cannot let the other get ahead or its all over.

Usually the two horses cannot pace themselves and a third stalking horse comes out of nowhere, sweeps around in the last turn and makes a mad dash for the finish line leaving the two favourites eating dust.

The two are playing the same game. Corporate thinking is so us vs. them who really understand the landscape.

Possible disruptors could be Apple. The iPhone and iPad were pretty good. The app store has wide distribution. Google is just desperate the make Android work. The Chinese would love to take a run at this as well.

So sit back and watch the race. The harder the more likely they will fail.

George Gutowski writes from a caveat emptor perspective.

Apple Investors and Heroin Addicts. Whats the Difference? $AAPL

Investors interested in Apple (Nasdaq:AAPL) are seeing a behavioural economic clash. Traditionally Apple has titillated the markets with stunning announcements. New and very sexy products. Increasing market share. Wildly increasing cash balances. Apple mentions in media were at orgasmically high rates. Frenzy frenzy frenzy. Normally associated with smaller names but this was Apple. Safety oriented pension plans were big investors.

Investors were hooked on the frenetic energy of constantly improving news which made the metrics look damn fine. Investors became anchored: emotionally, psychologically, addictively to the feed back loop. Buy more because more good news is coming. You’ll see.

Apple is a highly successful business not a perpetual money-making machine. Competition found its feet. Unsustainable metrics collapsed. The huge cash position is now being used to woo back the investor with dividends, huge share buy backs sometimes financed by debt (which currently is cheap)

But when you analyze the media and investment commentary there is one common unifying theme. It is the lament of a heavy drug user who is finding the drug losing its potency. Traders relying on a long Apple short something else now have to think for a living. Some seem to be incapable of thinking.

Apple has dropped obviously. They still have enormous cash positions and enormous abilities to raise debt at very cheap levels. The products while facing more competition are still in high demand. The applications eco-system is still enormously tilted in favour of Apple.

Apple is considered the new Sony. Sony never had the enormous cash position that Apple enjoys. Apple has not lost its ability to innovate. It does have more effective competition.

Apple does have one enormous advantage over Google and Android driven offerings. They have not pissed off the Chinese with search engine politics. The Chinese market is huge. Even if it does slow down it will still be huge. Samsung will always be treated with suspicion in China. Apple is the only entity which can bridge the cultural divide and create shareholders wealth.

Apple is relying on financial engineering for now. Investors are being enticed with dividend yield and share buy backs. Hard core Apple investors   traders do not understand how to deal with a dividend stock. The dividend stabilizes and allows you to become patient. Get paid while you wait.

Heroin addicts looking for the next rush are not anchored in the same fashion. Therefore we will have a rotation within the shareholder base.

George Gutowski writes from a caveat emptor perspective.

Sony No Banzai misses chance for redemption $SNE #sony #playstation

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Sony (NYSE:SNE) announced Q1 earnings and revealed losses. Market sells off the stock. Duh. They blame the earthquake which we all know about. They blame the security breach which we all know about. They blame falling TV prices which they left out of the headline but we all knew about.

This was an opportunity for Sony to write off and restructure. Mother nature served up the perfect excuse.  They clearly have inadequate cyber security which has hurt their brand. The red ink should have been deeper and bolder. Cut costs and reserve for future cost and write-offs.

Management is too timid.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours. Of all the consumer electronic decisions I have made recently or will make in the near future Sony did not figure prominently in my thinking.

Sony Case Study – When Do You Disclose Cyber Attacks $SNE #cyberattack #disclosure

Image representing Sony as depicted in CrunchBase

Image via CrunchBase

Sony (NYSE:SNE) seems to be recovering from the cyber attacks that recently crippled its on line game business. They probably are a whole lot smarter and a little poorer because of it. The financial disclosure issue is when do companies admit they are under attack and share the wonderful news with the investment community.  Sony had to say something because the entire client base was locked out. Sony was just a little on the quiet side as the attack first hit.

This is a conundrum for corporations. There is a very real stigma when cyber attacks work. Even now the Sony brand is clearly down a notch or two. But the attacks become material events in crisis mode. Companies are reacting to uncertain circumstances. They need to disclose from a position of confusion and embarrassment. They are on the backs on their heels and not forward on their toes.

The corporate governance risk will be to under disclose. Most executives are not strong IT guy’s. They will not have a deep understanding of the issues. Most investors professional and otherwise are also fairly shallow in their IT understanding. The blind will be leading the blind. The circumstance will only accentuate manic and erratic behaviour.

Corporations that disclose early will well serve their investors and stakeholders. Corporations that disclose late saying that they have been under attack for some time are the corporate governance failures. While they may be able to beat off the attack they will most certainly have unassessed damages that will bite later.

The late reporting corporations will be the scary ones who manage to shoot themselves in the foot. Executives blowing their feet off are not attractive investments.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

Sony Tipping Point or Self-Delusional $SNE #playstation

Image representing Sony as depicted in CrunchBase

Image via CrunchBase

Sony (NYSE:SNE) announced that it will not be profitable after all. Earthquake, Tsunami and Security Breaches are all Headline risks for Sony. They have been in a general slide for years having lost their cool a long time ago. To be cool and market dominant takes adequate financial resources. Of course there will be writes offs and lost profits. But will the financial engineering that is now underway in Sony’s boardroom be enough to set up the next cycle or are we just watching Sony executives put their finger into the holes in the financial dike.

The Earthquake and Tsunami are tragic but understandable. The security breach shows they were asleep on the bridge. Seven (7) count them seven directors are over 65. Another four (4) are between 60 and 65. The reinforcements do not look encouraging.

But will the grey hairs manage the write-offs to create capital efficiency or will they merely perform accounting duties and report on how bad Sony’s financial position really is. If they cannot dig their way out this time they will become a has been player trying to catch a falling knife.

Disclosure: “George Gutowski” writes from a “Caveat Emptor Perspective” I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

Will Sony Face Bank Lawsuits for Poor Security $SNE #playstation $SNE $V $MCA

Image representing Sony as depicted in CrunchBase

Image via CrunchBase

Sony (NYSE:SNE) clearly dropped the ball when its inadequate security allowed some 80 million credit cards to be compromised. The charge card companies are not happy with the cost of replacing 80 million charge cards on the fly not to mention the cost of interrupted usage and disputed claims.

Everyone has focused on Sony because it was their server and their product. Was Sony’s infrastructure up to snuff as per credit card issuer standards? If Sony can be hacked this way can other on line services also be hacked. Who arbitrated the overall security standards.

If  Sony was deficient the charge card companies should and could sue Sony for losses that are not their fault. Would the law suits come from Visa (NYSE:V) and MasterCard (NYSE:MCA) leading class action lawsuits or would the individual banks band together and commence legal action.

If Sony is able to prove that they met necessary standards as specified by the governing body of the issuers namely Visa and MasterCard would the individual banks be able to sue Visa and MasterCard.

So far no one is speaking and lawyers are tiptoeing about. But one thing is for sure. The numbers will be huge. But if the matter becomes a lawsuit then a lot of security issues go onto the record right where the hackers can read and learn. Shareholders are being screwed.

Disclosure: “George Gutowski” writes from a “Caveat Emptor Perspective” I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

$SNE Sony Reg FD Deficient About Play Station Hacker Attack #Playstation

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Sony (NYSE:SNE) has been faced with long-term service outages. The hackers have won this round and Sony is scrambling to pick up the pieces. This may become the text-book example of how a digital company can be brought to its knees. Sony is not talking about what it needs to do. They may claim the need for secrecy. I normally would subscribe to the logic but this time the bad guy’s seem to know everything they need to know. Of course once you have been kicked in the balls you may need a while before you can catch your breath.

When a product or service is not available for two weeks or more there are financial consequences. At the very least the brand is compromised. There may be lawsuits. Pricing may need to be adjusted. it goes on and on. Business as usual is not an option.

It took Sony a week to admit to its own customers that there was a problem. So far the investors have silence. Management has not warned that revenues , costs or profits are adversely affected. It has not occurred to management that they need to say something and silence is not golden. If investors continue receiving the mushroom treatment there will be a loss of confidence. When management eventually says something they will be greeted with financial skepticism and outright cynicism.

Investors deserve better. A problem of this scope will have financial ramifications. To pretend otherwise is reckless. When will the class action lawsuits start?

Disclosure: “George Gutowski” writes from a “Caveat Emptor Perspective”. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.