Sony to Sell TV and PC Units

Sony to Sell TV and PC Units

Yesterday, PlayStation maker Sony today announced dramatic changes to its TV and PC businesses, and announced plans to lay off 5,000 employees around the world. First, Sony announced that it will sell its VAIO PC brand, meaning the company will no longer plan, design, and develop any PC products. The Japanese company said the move came after a “comprehensive analysis of factors, including the drastic changes in the global PC industry.”

Sony Chief Executive Officer Kazuo Hirai expanded his reorganization after failing to meet a pledge to end TV losses this year and spur a revival. Previously having announced at least 10,000 job cuts. Sony plans to focus on mobile devices, games and imaging products. Sales of Sony’s key products are declining as the company struggles to find new hits and consumers shift to mobile devices by Samsung Electronics Co. and Apple Inc.

Sony said it had tentatively agreed to sell Vaio to Japan Industrial Partners Inc, a Japanese investment fund. It had hoped the struggling division would return to the black before the end of the current fiscal year. Its current fiscal year ends next month.

sonly-vaio-laptop-pcThe sale of Vaio is intended to help Sony better grow its mobile electronics business, which going forward would focus more on smartphones and tablets, the company said. “While Sony now anticipates that its target of returning the TV business to profitability will not be achieved within FY13 largely due to unexpected factors such as the slowdown in emerging markets and declining currency rates, the reforms executed within the TV business over the past two years are putting the business on a path to turnaround,” the company said in a statement.

Sony also announced that it would spin off its TV business, noting that it was struggling with reforming the division and that its target of returning the TV business to profitability would not be achieved by the end of the fiscal year ending March 31. It stated that it will not be selling off the business in the same way it has with its PC division. It described televisions as “still important” to the company’s overall strategy going forward.

Going forward, Sony — which has been engaged in various cost-reduction initiatives in its TV business — said it would accelerate its shift to high-end TV models.  It also said it had been reducing yearly losses in the TV business and that the reforms over the last two years “are putting the business on a path to turnaround.”

Having last turned an annual operating profit in TVs in the 12 months ended March 2004, losses for the 10 fiscal years through March 2014 add up to $7.8 billion. Sony said charges associated with the moves will combine with weaker showings than it expected in mobile phones, TVs and PCs to pitch it into a net loss this fiscal year of $1.1 billion.

Sony is hoping that 4K will prove to be the lifeline for the television industry. Sony has the largest marketshare in the ultra-high-definition market in both Japan and the United States. As part of the PC and TV moves, Sony said it expected to cut about 5,000 jobs — 1,500 in Japan and 3,500 overseas — by the end of March 31, 2015.

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