The Tokyo-based company said today it would report a wider full-year loss of 230 billion yen ($2.1 billion) because it was writing down the value of its faltering smartphone business. Sony also said it won’t pay an annual dividend for the first time since its listing in 1958. Shares in Germany were headed for their biggest drop in more than five years.
Hirai has been working to turn around Sony by emphasizing entertainment and game content, consoles and mobile devices as demand for televisions and compact cameras has declined. With the Xperia smartphone lineup struggling, his other options for reviving the
company are Hollywood movies, music and the PlayStation video-game business.
“Sony should have done it earlier,” said Masahiko Ishino, an analyst at Advanced Research Japan Co. “A lot of people were questioning why it didn’t write down the mobile goodwill earlier as the business hasn’t been doing well since the beginning of the fiscal year.”
German-traded shares of Sony fell 11 percent to 13.95 euros as of 11:46 a.m. local time. In Tokyo, the stock fell 1.8 percent to 2,123.50 yen, paring a 16 percent gain this year.
Kazuo Hirai, President and Chief Executive Officer of Sony Corp., is struggling to... Read More
Xiaomi, Lenovo
Sony is taking a 180 billion-yen impairment charge because it expects less cash from the smartphone business, the company said in a statement. It is cutting about 1,000 workers from the 7,100-person unit and reducing the number of mid-range models as Chinese manufacturers gain global market share, Hirai said in a briefing.“With regards to competition, while there are many forces at play, one of them is Chinese smartphone makers who, especially within the Chinese market, are dramatically breaking through,” Hirai said.
Xperia devices command about 3.1 percent of the global market for smartphone shipments, and Sony earlier this year revised its annual sales forecast down to 43 million units from 50 million.
Sony was passed in smartphone sales by Chinese makers including Huawei Technologies Co., Lenovo Group Ltd. (992) and Xiaomi Corp. that offer feature-packed devices for as low as $100. Beijing-based Xiaomi, the top seller in China, plans to boost its global sales to 100 million units next year.
Sprint Deal
Sony’s mobile products unit posted a loss of 2.7 billion yen in the first quarter. The company isn’t paying a dividend this year after paying 25 yen per share last year. Hirai said his “No. 1 responsibility” is to reinstate the dividend.Sony trails Samsung Electronics Co. (005930) and Apple Inc. (AAPL) by a wide margin in global smartphone sales, ranking ninth in the second quarter with shipments of about 9.4 million units, according to data compiled by Bloomberg. Samsung unveiled its Galaxy Note 4 device on Sept. 3, and Apple is scheduled to release its new iPhone 6 models on Sept. 19.
“Sony couldn’t help but admit the limitation of sales and profit from smartphones and tablets,” said Yasuaki Kogure, chief investment officer at Tokyo’s SBI Asset Management Co.
Sony is trying to boost overseas sales for the Xperia. SoftBank Corp. (9984) and its U.S. unit Sprint Corp. will offer the devices for the first time, and sales may start by the end of the year, a person familiar with the matter has said.
Spider-Man
Hirai has been pushing his One Sony plan to better integrate the company’s electronics and entertainment assets to revive earnings. The mobile unit will be profitable in the fiscal year ending in March 2016, he said today.Earlier this month, Sony unveiled new devices that function as displays for PlayStation games. The Xperia Z3 smartphone is waterproof and comes with a battery that can stay charged for two days, and the Z3 Compact smartphone has a 4.6-inch screen, the company said.
Sony’s announcement comes less than two months after posting a surprise profit of 26.8 billion yen in the first quarter as the PS4 led console sales and “The Amazing Spider-Man 2” topped Hollywood box-office receipts. The PS4 has beaten sales of competing machines from Microsoft Corp. and Nintendo Co. (7974) for eight straight months, Sony said last week.
When Hirai took over as CEO in 2012, he said Sony’s revival would be driven by games, imaging products and mobile devices. Since then, the company has announced job cuts and a restructuring to make TV manufacturing a separate unit. Hirai has trimmed the TV product lineup to focus on larger-screen models.
“It’s good to see Sony kitchen-sinking it ahead of what should be a dramatic rebound in its profits next FY,” Amir Anvarzadeh, a manager of Japanese equity sales at BGC Partners Inc. in Singapore, said in an e-mail. “We see the impairment charge as yet another negative now out of the way.”
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