Sony dumps its PC business, splits its TV division and cuts 5,000 jobs, and issues a fiscal warning. But lacking is clarity: We all know what Sony was, but what is it becoming?
MADISON. Wis. – Sony dumps its PC business, splits its TV division and cuts 5,000 jobs, and issues a fiscal warning -- a loss of 110 billion yen, instead of a previously forecast profit of 30 billion yen -- in the current fiscal year ending in March.
It’s hard to find any bright spots left for the company that was once Japan’s guiding star in the global market.
Obviously, letting go of its PC and TV units is costing Sony dearly. The company anticipates a restructuring charge of 90 billion yen over the next two years. But keeping those two divisions wouldn’t have helped. By fighting for the survival of PCs and TVs, Sony would continue to hemorrhage indefinitely.
As previously reported, Sony is planning to sell its Vaio PC unit to Japan Industrial Partners, a private equity venture backed by Bain Capital and Mizuho Securities. Sony will spin its TV business into a subsidiary. Although keeping it as a separate company, Sony might be looking for its eventual sale.
Many investors and those in the analyst community appear to believe that Sony’s chief executive Kazuo Hirai has made reasonable choices.
However, what gets to me, and many veteran Sony followers, is the lack of clarity: We all know what Sony was, but what is it becoming?
Rebuilding the foundation of Sony’s future on the back of smartphones and game consoles is hardly an answer, in my opinion.
These two businesses showed progress in the third quarter ending in December. Sony reported a “significant increase in sales of smartphones,” and a jump in operating income in its game division due to the PlayStation 4 console launch.
But with smartphones and game consoles, will Sony be able to sustain growth over a long haul?
At a time when these two consumer electronics products are fast becoming legacy platforms, well, good luck to Hirai.
No exit strategy?
This morning, as I read the New York Times’ story on Sony’s earnings, I came across the following quote:
Mr. [Damian] Thong, the Macquarie analyst, said Mr. Hirai’s strategy of hanging on to certain consumer electronics businesses made sense because the company has always been more heavily focused on these areas than rivals like Panasonic.
“There is no exit strategy,” Mr. Thong said. “Sony is a consumer electronics company.”
Really? Sony has no exit strategy?
Here’s a comment that makes Sony’s future look even bleaker.
In search of an answer, I spent a little time this morning watching video of a keynote speech, given last month by Sony chief Hirai, at the International CES.
CES 2014's keynote address by Kazuo Hirai, President and CEO, Sony Corp.
Click here to watch the video clip.
Of course, these keynote speeches are usually so full of self-serving blather and sales pitches that finding any substance is like panning for gold.
But in the middle of the almost an hour-long video, it suddenly hit me.