Sony sheds Vaio PC business, turns TV unit into subsidiary

Sony steps up reforms as it forecasts a ¥110 billion loss for its fiscal year to March 31

Sony will sell its struggling PC business to a Japanese investment firm, the company said Thursday, meaning the slick "Vaio" brand could all but disappear from markets outside Japan.

Tokyo-based investment fund Japan Industrial Partners (JIP) will operate the Vaio PC brand under a newly established firm and initially sell PCs in Japan only.

In another reform aimed at bolstering its restructuring efforts, Sony also said it would turn its beleaguered TV business into a subsidiary.

The moves come as Sony said it now expects a net loss of ¥110 billion (US$1.1 billion) for the year to the end of March, a reversal of its October forecast for net profit of ¥30 billion.

Vaio, which Sony introduced in 1996, looks set to vanish from most markets, at least for short term, as the new company will initially concentrate on selling consumer and corporate PCs in Japan. Whether or not Sony will continue to produce products under the Vaio brand remains to be seen, Sony said.

Although Sony is selling its PC business, it will continue to produce tablet computers, part of its renewed focus on mobile devices including smartphones.

Sony did not put a price on the sale, but a report in Japanese business daily Nikkei pegged it at about ¥40 billion to ¥50 billion. Sony will take a 5 percent stake in the new firm, it said.

Sony will stop making and selling PCs after its 2014 Spring lineup launch, but about 250 to 300 Sony staff, including some from a subsidiary that produces TV sets, cameras and computers at factories in Japan, will be hired by the new company, which is to be based at the hub of Sony's current PC business in Japan's Nagano Prefecture.

The Vaio sale was announced along with Sony's earnings results for the October-December period, in which it posted an operating loss of ¥12.6 billion for the Mobile Products & Communications unit, which is responsible for PCs, sales of which were down significantly.

The results were better than the ¥21.3 billion loss a year earlier.

Meanwhile, Sony said it will turn its TV business, which has faced a decade of losses, into a wholly owned subsidiary by July 2014.

"From next year onward, the 4K market segment is expected to grow," Sony President and CEO Kazuo Hirai told an earnings conference. "By splitting out the TV business, its management speed will be accelerated and responses to markets will be speedier."

Hirai pointed to Sony Mobile Communications, its smartphone arm, and Sony Computer Entertainment, which produces Sony's PlayStation video game consoles, as wholly owned subsidiaries that have benefitted from quick management decisions to improve their business.

"They may be independent business entities, but the management is under the One Sony concept and spirit," Hirai added, referring to the slogan for his corporate restructuring vision implemented after he took the helm in April 2012. It calls for more cooperation among Sony's separate business units.

About 5,000 jobs will be cut as part of the reforms, including changes to manufacturing and other support functions. The company will shed some 1,500 positions in Japan and 3,500 overseas by the end of March 2015, and book additional restructuring expenses of ¥90 billion.

"My mission is to achieve a turnaround of the electronics business and to further grow it to contribute to the Sony group as a whole," Hirai said. "To fulfill that task is my mission."

Analyst Damian Thong, an analyst at Macquarie Securities, said: "The restructuring programme is more extensive than we had expected. The key for Sony now is to balance the need to get costs down, and the imperative to deliver stellar products that will ignite consumer interest.

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Tim Hornyak

IDG News Service
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