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Sony Plans the Biggest Buyback since 2004

Sony Corp. $SNE announced Friday that they will be buying back its own stock at a total value of around $910 million, for the first time in their long history. 

Shares went up on 4.1 % on Friday after the company announced the buyback, which is due to begin Tuesday and will last through March 22.

The repurchase makes up 2.4 % of the volume. Sony has been trying to improve its financial grounding under Chief Executive Officer Kenichiro Yoshida, who was promoted from CFO last year. Last week, Sony reported weaker profits in the PlayStation business and cut its annual revenue forecast, triggering the steepest share drop in almost three and a half years.

“It seems they were perturbed by the steep stock decline,” said Masahiro Wakasugi, a Bloomberg Intelligence analyst. “They’re watching the stock price, cash flow is strong and they have the financial resources to carry this out. So it’s a strong message to investors.”

Before Friday’s buyback announcement, Sony’s stock had declined 14 percent over the week, to its lowest since October 2017. The shares climbed 4.8 percent in 2018. 

Sony’s results highlight the struggle many big technology companies are facing at the moment, and Sony have been hurt by a slowing demand for their products and services. Apple Inc. reported a decline in revenue for the first time in two years, while chipmakers Intel Corp. and Nvidia Corp have warned of weaker sales as China’s situation has become unclear as same as uncertainty over Brexit.

“The buyback itself was a surprise,” said Hideki Yasuda, the analyst at Ace Research Institute. “Management probably thinks Sony’s share price is undervalued.”

 

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