http://m.statesman.com/news/business/sony-expects-losses-to-grow-to-214-billion/nhPf6/
Business
Posted: Sept. 17, 2014
Sony expects losses to grow to $2.14 billion
By Paul Mozur
The New York Times
HONG KONG —
The Japanese electronics giant Sony said Wednesday that it expected to post a loss of more than $2 billion for the fiscal year, almost five times larger than it previously forecast, exposing signs of serious wear in its mobile unit.
The electronics maker said the loss of 230 billion yen, or $2.14 billion, for the fiscal year that ends in March — compared with an earlier projection of 50 billion yen — was deeper than it had expected because of reduced growth in its once-thriving mobile segment. The additional losses come from a quarterly write-down charge on the unit’s value of about 180 billion yen. It also said it would not pay a dividend for the year.
In a news release, Sony said it would focus more on its higher-end phones and cut the number of phones in its midrange lineup. It also said it would change the strategy for the division. Sony’s president and chief executive, Kazuo Hirai, said at a news conference Wednesday that the company would cut the division’s workforce by 15 percent, or about 1,000 workers.
“We had to make changes of our midterm management plan given big changes and severe competition in the market,” he said. “We had to make changes in our strategy. We will concentrate our management resources on countries and regions where we can expect high profit, and will review our strategy if we see low profit and growth in certain regions or countries.”
Last year, Sony’s mobile phone division was its most profitable, but the company has faced falling sales as competition from Asian rivals in midrange smartphones has intensified. For instance, in the world’s largest smartphone market, China, companies like Huawei and Xiaomi have become dominant.
At the higher end, the company faces tough rivals in Apple and Samsung. Analysts said that Sony’s new Xperia Z3 smartphone could struggle because its release coincided with the announcement of the iPhone 6 from Apple.
“Changes are so dramatic in this market, in terms of product and price and services,” Hirai said, referring to the overall mobile market. “We have to watch the situation carefully and try to shape the organization so that we can react to these changes.”
Still, others have been positive about Sony’s handset unit, pointing out that a more modest plan aimed at the company’s strongest markets, like Japan, could prove successful.
“This seems to be the end game for Sony as a major player in consumer electronics; it’s a bit of a bellwether moment,” said Pelham Smithers, managing director of Pelham Smithers Associates in London.
“This was well flagged,” Atul Goyal, an analyst at the investment bank Jefferies, wrote in a research note. “The rationale for taking this impairment charge actually makes us bullish. This has shown that a sensible C.F.O. is able to control the expansionary aspirations of business heads, which, if unchecked, would lead to larger losses for Sony.”
This year, Sony sold its computer division and spun off its television group into a separate unit.
In July, Sony said its midrange smartphones did not sell as well in emerging markets as the company had anticipated, and it cut expected sales volume of smartphones to 43 million from 50 million.
“We believe the mobile business is one of our core businesses, along with the game network and imaging businesses,” Hirai said. “We will continue to do business in this big market.”
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Business
Posted: Sept. 17, 2014
Sony expects losses to grow to $2.14 billion
By Paul Mozur
The New York Times
HONG KONG —
The Japanese electronics giant Sony said Wednesday that it expected to post a loss of more than $2 billion for the fiscal year, almost five times larger than it previously forecast, exposing signs of serious wear in its mobile unit.
The electronics maker said the loss of 230 billion yen, or $2.14 billion, for the fiscal year that ends in March — compared with an earlier projection of 50 billion yen — was deeper than it had expected because of reduced growth in its once-thriving mobile segment. The additional losses come from a quarterly write-down charge on the unit’s value of about 180 billion yen. It also said it would not pay a dividend for the year.
In a news release, Sony said it would focus more on its higher-end phones and cut the number of phones in its midrange lineup. It also said it would change the strategy for the division. Sony’s president and chief executive, Kazuo Hirai, said at a news conference Wednesday that the company would cut the division’s workforce by 15 percent, or about 1,000 workers.
“We had to make changes of our midterm management plan given big changes and severe competition in the market,” he said. “We had to make changes in our strategy. We will concentrate our management resources on countries and regions where we can expect high profit, and will review our strategy if we see low profit and growth in certain regions or countries.”
Last year, Sony’s mobile phone division was its most profitable, but the company has faced falling sales as competition from Asian rivals in midrange smartphones has intensified. For instance, in the world’s largest smartphone market, China, companies like Huawei and Xiaomi have become dominant.
At the higher end, the company faces tough rivals in Apple and Samsung. Analysts said that Sony’s new Xperia Z3 smartphone could struggle because its release coincided with the announcement of the iPhone 6 from Apple.
“Changes are so dramatic in this market, in terms of product and price and services,” Hirai said, referring to the overall mobile market. “We have to watch the situation carefully and try to shape the organization so that we can react to these changes.”
Still, others have been positive about Sony’s handset unit, pointing out that a more modest plan aimed at the company’s strongest markets, like Japan, could prove successful.
“This seems to be the end game for Sony as a major player in consumer electronics; it’s a bit of a bellwether moment,” said Pelham Smithers, managing director of Pelham Smithers Associates in London.
“This was well flagged,” Atul Goyal, an analyst at the investment bank Jefferies, wrote in a research note. “The rationale for taking this impairment charge actually makes us bullish. This has shown that a sensible C.F.O. is able to control the expansionary aspirations of business heads, which, if unchecked, would lead to larger losses for Sony.”
This year, Sony sold its computer division and spun off its television group into a separate unit.
In July, Sony said its midrange smartphones did not sell as well in emerging markets as the company had anticipated, and it cut expected sales volume of smartphones to 43 million from 50 million.
“We believe the mobile business is one of our core businesses, along with the game network and imaging businesses,” Hirai said. “We will continue to do business in this big market.”
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