The Japanese electronics and entertainment giant, which
predicted on Thursday that it would lose 110 billion yen, or about $1.1
billion, in its current fiscal year, said it would sell its unprofitable
personal computer unit. It also announced plans to turn its equally troubled
television manufacturing business into a separate, wholly owned subsidiary. And
it said it would cut 5,000 jobs.
The overhaul marks the fourth round of large-scale job cuts
over the past decade. Sony announced 10,000 reductions in 2005, 8,000 more in
2008 and a further 10,000 two years ago, bringing its head count down to
145,000 as of September.
“Sony has had bigger cuts,” said Damian Thong, an analyst at
Macquarie Securities “But these are, in some ways, the most meaningful
cuts.”While previous divestitures have involved peripheral operations in areas
like chemicals, now Sony is ridding itself of a brand and a business: Vaio
computers, which it once considered central to its ambitions of keeping pace
with global technology powers like Apple and Samsung Electronics. And it is
positioning itself at arm’s length from television, a sector in which its
Trinitron and Bravia TVs once set the standards in picture quality and brand
image.
While Sony’s problems reflect a broader crisis in the
Japanese electronics industry, other companies, like Panasonic, have moved more
aggressively to restructure. Panasonic, which has been pulling out of certain
consumer electronics markets, like smartphones, and focusing more on behind-
the-scenes businesses like batteries for electric cars, this week reported that
its quarterly earnings more than tripled.
While some investors and analysts have urged Sony to get out
of consumer electronics entirely, the chief executive, Kazuo Hirai, reiterated
on Thursday that he wanted to rebuild around promising areas like game consoles
and smartphones.
Those businesses showed progress in the quarter ended in
December. Sony reported a “significant increase in sales of smartphones” as
well as a big jump in operating income in its game division because of the
introduction of the PS4 console.
Over all, the company reported net income of ¥27 billion, or
$267 million, after a loss of ¥10.8 billion a year earlier. Sales rose to ¥2.41
trillion from ¥1.95 trillion, though the main factor was a weaker yen, which
increases the value of overseas sales when converted into the Japanese
currency.
But investors have gotten used to a dose of bad news
following any sign of improvement from Sony, and Thursday brought no exception,
with the new estimate of a ¥110 billion loss for the current fiscal year, which
ends in March, after a previous forecast of a profit of ¥30 billion. While much
of the expected loss will come from restructuring costs, Sony also lowered its
full-year sales forecast for smartphones to 40 million devices from 42 million.At
a news conference in Tokyo, Mr. Hirai described the agreement to sell the PC
unit — to the investment fund Japan Industrial Partners — as an “agonizing
decision.” Sony said it planned to keep a 5 percent stake in the new PC company
to be formed from the sale. Other terms, including the price, remain subject to
negotiation, Sony said.
Japan Industrial Partners specializes in buying unwanted
assets from Japanese electronics giants, including companies like NEC and
Olympus.
Japan Industrial Partners “believes that with its support,
the new company that will operate the Vaio-branded PC business will be able to
achieve future growth and profitability and meet the expectations of Vaio
customers by leveraging the wealth of innovative design expertise and
operational know- how accumulated by Sony within the PC business,” the
companies said in a statement.
Along with televisions, PCs have been a particular drag on
Sony. PC shipments from all makers worldwide fell 10 percent last year, to 316
million, according to Gartner, a research firm, as more consumers turned to tablet
computers or smartphones to connect to the Internet. Sony’s share of that total
slipped to 1.9 percent worldwide in 2013 from 2.1 percent in 2012, Gartner
said, making it the ninth-largest maker of PCs worldwide.
With profit margins under pressure in the PC sector, only a
handful of the biggest companies, including the market leader, Lenovo, make
money in the business.
“Somebody has to exit from the market because there are
still too many competitors,” said Mikako Kitagawa, an analyst at Gartner. “This
is an extremely difficult market in which to survive. That is not going to
change.”
After splitting off its television business into a
subsidiary, Sony said, the new unit will focus on expensive sets, including
ultra-high-resolution 4K TVs, while scaling back output of cheaper models.
While Sony is retaining ownership, the new structure could
also make it easier to open the TV business to outside investment, analysts
said. The changes could also make it easier for the company to cut costs by
outsourcing more manufacturing and other operations, while retaining the Sony
brand.
Sony has adopted such structures for other business lines,
including mobile phones, with mixed results.
In 2001, Sony set up a joint venture with Ericsson of
Sweden, but the partnership struggled and Sony bought out Ericsson’s stake in
2012.
Mr. Hirai, the Sony chief, said that while the company had
no immediate plans to sell the TV arm, it was keeping its options open.
“There are many possibilities, not just for our TV
business,” he said.
You can visit the below blogs for more details.
Original link Click Here
No comments:
Post a Comment