As expected loss mounts to 110 billion yen ($1.1 billion), Sony seeks to save the company from a slow death by severing off its PC business, creating a separate entity for its TV division and eliminating 5,000 jobs. Things are not sunny for Sony right now!
Seventeen years in the PC business and no reinvigorated vision were enough for the dust to settle on VAIO. VAIOs have not exactly sold like hotcakes in a shrinking PC market during the past few years; sending the Japanese electronics’ manufacturer in a downward spiral. To that end, Sony agreed to sell the brand to Japan Industrial Partners Inc. (JIP) for an undisclosed amount, but rumours peg it at $400 million. In concrete terms, it means that Sony will no longer be a PC maker as from March 2014, when all terms and conditions will be settled. However, Sony is retaining 5% stake in the company.
The end of its PC business is just the beginning for the tech player in other emerging businesses. The sale of VAIO will help the tech behemoth to reignite its growth and also to sharpen its focus on mobile devices, games and imaging products like Hirai, the Chief Executive Officer of the company announced during the press conference.
The maker of Bravia will also split its TV division off into a separate subsidiary company by July 2014 to reverse significant loss of 25 billion yen for the tenth straight year. The production of TV sets sits at the core of Sony’s activities but despite being the world’s No.3 in this segment, stiff competition is driving its brand out of the top league.
But, Sony intends to hold tight amidst the growing storm. “If you are asking if we have any plan to sell off our TV business, I can say we have absolutely no plan to do so right now,” CEO Kaz Hirai said.
By creating a separate entity for its TV division, Sony hopes to strengthen its 4K portfolio, push its 2K models further in the market and customize offers to suit demands in emerging nations.
The restructuring campaign should stretch over two years, costing the company a towering amount of 140 billion yens. To trim expenses, the Japanese multinational will lay off 5,000 employees working for both the TV and the PC branches; 1,500 in Japan and 3,500 oversees.
Considering the overall business, Sony is swallowing its fifth loss in six years and even the positive financial performance of PlayStation 4 is hardly comforting. The game console, which recorded sales of 4.2 million units in over a month after its November launch, is well set to achieve its 5 million sales’ target by March this year.
Meanwhile, in the tech world, all eyes are on the Land of the Rising Sun where investors expect that a new dawn will rise for the inventor of the Walkman.
Source: Reuters, Wall Street Journal