Sony slashes forecasts again, expecting $1.1bn in losses
Sony has fallen on hard times recently, with their new “junk” credit rating costing $2.2bn in market value.
Sony’s CEO Kazuo Hirai has said today that they are no longer expecting a profit for this year and are instead forecasting a ¥110bn ($1.1bn) loss, bringing the company into its 10th straight year in the red. The company is making its television business a separate subsidiary, and are going through with what Mr Hirai describes as “agonizing decision” to sell off their failing Vaio PC and laptop business to Japan Industrial Partners Inc., a Japanese technology group managing businesses in trouble.
The move to split off its TV business is somewhat unexpected by analysts, despite Sony having done the same with Playstation and Sony’s mobile telephone businesses in the past. While this move would certainly help Sony sell their television business in the future, Hirai emphasized there’s no plan to sell the business at this moment in time. Despite Sony’s TV business seeing a 40% increase in sales in recent months, Sony still expects to lose $2.5bn (¥25bn) in television sales for the full year.
With these steps, Hirai states that the company is free to concentrate on its more promising businesses. Since taking over in 2012, Hirai has been particularly focused on the gadget-based side of Sony, especially with regards to the Xperia smartphone and QX lens cameras that can be attached to smartphones. While these innovations are certainly helping Sony, analysts fear that without a real best-seller product, they may not be enough to pull them out of the red.
This being said, Hirai admitted himself that Sony are not out of the woods, with the company restructure being far from over. He made a rare appearance at a news conference on Thursday saying “I hope this puts a period to structural reforms of this scale… But with competition increasing, we need to constantly review and reshuffle our business portfolios.”
With this latest restructuring, investors are hoping Hirai can put the company back on track.
Between a weak yen and strong sales of the PlayStation 4, Sony could still walk away from this largely intact. The PS4 sold 4.2 million units between its launch in mid and the end of December, putting it well on track to beat its target of five-million consoles by March 2014.
Mr. Hirai said he would detail Sony’s longer-term growth strategy this spring.
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