Sony Bids Sayonara To Its Computer Business

Sony is shuttering its computer business, refocusing its TV division on high-end units and laying off 5,000 people. It is also predicting a massive loss of 110 billion yen, or $1.1 billion, for the fiscal year, a drastic change from its prediction three months ago of a 30-billion yen profit ($294 million).

There was a time, long ago, when it looked as if Japanese electronics companies -- and foremost among them Sony -- would take over the world. But no longer. Apple and Samsung dominate the consumer market for tablets and smartphones, and Sony is now being forced to undergo costly restructuring to survive.

Sony's TV business has long been a loser. It has cost the electronics giant $7.8 billion over the past decade, according to Reuters. Sony plans to spin it off into a subsidiary company by July of this year, hoping to streamline processes and return it to profitability by the end of the fiscal year ending March 31, 2015.

To some observers, this move could look like preparation for disposing of the TV division altogether. But Sony chief Kazuo Hirai told reporters in Tokyo that "we have absolutely no plan" to sell off the TV business, according to Reuters. The way forward, Hirai thinks, lies in high-end models, especially ultra-high-definition 4K TVs, which have yet to go mainstream.

Sony will be posting a net loss for the fifth time in six years. As part of restructuring, the Japanese electronics maker will let go more than 3 percent of its global work force by March 2015. The company expects the layoffs to save 100 billion yen, or $1 billion, in annual costs. As of September 2013, Sony had 145,800 employees.

Sony's computer business is also a goner. After spring 2014, when its final lineup of personal computers will launch, Sony will stop manufacturing and selling computers. Its PC business will be sold to Japan Industrial Partners, an investment fund, and about 250 to 300 Sony employees will move to the new company which the fund will set up to manage the PC business.

Even Sony's successes are somewhat muted. Its Playstation 4 gaming console is on pace to beat sales expectations of 5 million units by the end of March. But this latest iteration of the popular Playstation was so expensive to develop that it will take two years to break even on the console, Sony said.

One Sony division is performing admirably, however. The financial services unit did so well in the fiscal quarter from October to December 2013 that Sony managed to post an operating profit of more than 90 billion yen, nearly twice the previous year's amount.

Source: Agencies