According to a report from Reuters, Sony is now considering drastic actions like a sale of its mobile phone business after failing to resuscitate the operation with a focus on high-end smartphones. The report noted that the company isn't currently considering any specific deals, but could implement a sale or strategic partnership on its struggling business units like its mobile phone division.
"Electronics in general, along with entertainment and finance, will continue to be an important business," Sony Corp CEO Kazuo Hirai told reporters last week, according to Reuters. "But within that there are some operations that will need to be run with caution--and that might be TV or mobile, for example."
Citing unnamed company officials familiar with the situation, Reuters reported that Hirai and other Sony executives are now considering options including sales and joint ventures for Sony's money-losing TV and mobile phone businesses. "No business is forever," Reuters quoted one source as saying, adding that "every segment (at Sony) now needs to understand that Sony can exit businesses."
Of course, Sony is by no means the first smartphone maker to face major difficulties in the smartphone sector. Nokia--once the world's largest mobile phone manufacturer--sold its phone business to Windows Phone vendor Microsoft (NASDAQ: MSFT) last year. And Ericsson (NASDAQ: ERIC) sold its stake in the Sony Ericsson smartphone maker to Sony in 2012, which was the same year that Hirai took over as Sony's new CEO.
Since 2012, Sony has been working to revitalize its smartphone business with a focus on the high end, highlighted by the company's lineup of Xperia-branded phones. In the United States, wireless operators including Verizon Wireless (NYSE: VZ) and T-Mobile US (NYSE:TMUS) sell Sony Xperia phones.
But Sony has been struggling in the phone space as Samsung and Apple (NASDAQ: AAPL) continue to dominate sales of high-end devices and Chinese vendors like Huawei and ZTE gobble up share in the low-end smartphone space. Indeed, late last year Sony said it would reduce the number of smartphone models it would build in order to boost profits in its mobile unit. "Our urgent task is to make the business profitable even if we face declines in sales by 20 percent or 30 percent," Hiroki Totoki, the recently appointed chief of Sony Mobile Communications, explained in November, according to the Wall Street Journal.
Sony has said it expected to ship 41 million smartphones in its current fiscal year, which ends at the end of March 2015, but that figure that was cut from 43 million units in July and 50 million units in April. In late October, Sony booked an impairment charge on its mobile business of around $1.5 billion (¥176 billion).
Reuters noted that Sony has cut its earnings forecasts six times since Hirai took over as CEO in 2012. Sony is now forecasting a $1.9 billion net loss for this fiscal year, which ends in March--and the company said it will suspend dividend payments for the first time.
"The mobile and TV businesses both require a drastic overhaul," warned Citigroup analyst Kota Ezawa, in comments to Reuters. "Without drastic reforms such as joint ventures or alliances, they will both be in the red three years from now."
For more:
- see this Reuters article
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