As losses mount, Sony steps up restructuring

 

ON DISPLAY: A shopper looks at Sony’s Bravia television monitors at an electronics store in Tokyo, Japan

Sony stepped up efforts to turn around its unprofitable electronics operations, quitting the personal computers business and splitting its TV division into a separate unit as it warned it expects steep losses this year.

The Japanese company said on Thursday the restructuring would cut 5,000 jobs and trim ¥100bn ($988m) a year from fixed costs in the longer term. Losses in the TV business have long dogged its efforts to compete with global consumer electronics giants such as Apple and Samsung Electronics.

With restructuring costs rising at the same time as core mobile and home entertainment businesses falling short of its expectations, Sony said it now forecasts a net loss of ¥110bn in the financial year ending in March.

It previously expected a net profit of ¥30bn.

The job cuts, which will come in both TV and PC divisions, are to be implemented by March 2015. The cost savings are to kick in by the 2015-16 financial year, Sony said.

Sony said the Vaio PC division, as widely expected, will be sold to investment fund Japan Industrial Partners, which will set up a separate company to take over the operations.

The financial terms of the sale weren’t disclosed, but Sony will initially hold a 5% stake in that company.
The TV operations will be spun off into a separate unit by July 2014, Sony said.

Having last turned an annual operating profit in the 12 months ended March 2004, Sony’s TV business piled up losses of ¥761.9bn in the nine financial years before the current one. Sony officials on Thursday said they expect to lose another ¥25bn on TVs this year.

Buoyed by a strong performance in its financial services unit in the October-December quarter, Sony posted an operating profit for the three months of ¥90.3bn, up from ¥46.43bn a year earlier. That was above consensus forecasts of ¥71.9bn, the average of estimates from six analysts surveyed by Thomson Reuters IBES.

But with core businesses such as its smartphone, PCs, TVs and audio operations weaker than it expected through the first nine months of the financial year, Sony slashed its full-year operating profit forecast to ¥80bn from the ¥170bn it previously expected.