SNE: Merrill Says Sell, Nomura Says Hold On Macro Worries

Global macroeconomic worries appear to have crept up on some of Asia’s larger tech names, with Nomura Equity Research and Merrill Lynch today cutting their ratings on Sony (SNE). Nomura also cut its rating on Panasonic (PC).

I don’t have access to Merrill Lynch’s note from Eiichi Katayama cutting the shares to Underperform from Neutral, as Merrill does not distribute its research material to the press. That note appears to have included a cut in Sony’s price target from $27.87 to $15.97.

Nomura’s Shiro Mikoshiba cut the stock to Neutral from Buy, arguing the company will need to cut costs to counter a “greater-than-expected deterioration in macroeconomic conditions,” and a rise in the Japanese Yen.

The company has instituted an “asset-light” structure in recent months, but its not enough, insists Mikoshiba. The danger, writes Mikoshiba, is that cutting could do real damage to operations such as television production.

“The TV business, which is generating operating losses of almost �100 billion, has heavy personnel costs related to R&D and marketing, but as this includes a great deal of expenditure shared with other products, making any moves in this business will not just affect TVs alone but will pose problems for Sony�s entire cost structure.”

Mikoshiba cut estimates for Sony’s revenue this fiscal year ending in March of 2012 to �6.87 trillion from a prior �7.01 trillion. Mikoshiba also cut estimated operating profit to �140 billion from a prior �210 billion. Those numbers are actually better than the current Street consensus of �6.74 trillion and �118 billion, respectively.

The gloomy discussion hasn’t hurt Sony shares today, however. The ordinary shares closed up �66, or almost 5%, at �1,470 in Nikkei trading, while Sony’s American Depository Receipts are currently up 20 cents, or 1%, at $18.98.

That may be because Sony is said to be nearing a deal to buy out Ericsson (ERIC), its partner in the mobile phone business, as reported by The Wall Street Journal’s�Daisuke Wakabayashi this morning. It’s possible there’s some enthusiasm that Sony is going to make a bolder move in mobile phones and tablets if the rumor is true.