Sony has announced it is selling its VAIO PC business to investment firm Japan Industrial Partners, spinning off its Bravia TV business into a separate subsidiary and slashing its global headcount by 5000 as part of a major restructure.
The strategy identifies the company’s imaging, games and mobile businesses as the core product lines that would help the conglomerate grow in the consumer electronics market.
In a statement, Sony says while it anticipated its TV and PC businesses would also return to profitability, those targets will now not be achieved within the current fiscal year.
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“Sony identified PCs and TVs as businesses for which profitability improvement would be a key priority and implemented various reform measures… However, Sony now anticipates its target of returning the TV and PC businesses to profitability will not be achieved within the fiscal year ending March 31, 2014.”
In response, Sony is exiting the PC market altogether and selling its VAIO PC business to JIP, with the deal expected to be closed by the end of March. Sony says JIP’s experience in ‘strategic carve-outs’ would help VAIO realise its “growth potential as an independently operated entity”.
Between 250 and 300 employees involved within Sony Group’s PC operations are expected to be hired by the new JIP-controlled entity, which will initially focus on the Japanese market.
News of the sale comes just days after Japanese national broadcaster NHK reported Sony was looking to sell its troubled PC business to Chinese computer giant Lenovo.
Sony responded with a statement at the time saying while it was not in talks with Lenovo, it was examining “various options for the [Vaio] PC business”, prompting sale speculation.
Sony also announced it is spinning off its Bravia television subsidiary into a separate, wholly-owned subsidiary, which will focus on the high-end TV market, with July 2014 the targeted time frame for the transition.
“By implementing these measures, Sony is aiming to further enhance its TV business’ profit structure and return the business to profitability during FY14.”
The company also announced dramatic cuts to its manufacturing, sales, and head office operations staff.
“In terms of electronics sales companies, Sony plans to identify focused product categories for each specific country and region, rationalize support functions, and proactively implement outsourcing and other efficiency measures with the objective of achieving total cost reductions of approximately 20% by the fiscal year ending March 31, 2016”
“Sony will also streamline … headquarters and support functions and expects to achieve cost reductions of approximately 30%.”
The company says it aims to cut 5000 staff, including 1500 in Japan and 3500 internationally. It is unclear at this time how many jobs will be axed from the company’s Australian operations.
The restructure comes after Hirai rejected a proposal by US hedge fund Third Point and its chief executive, Dan Loeb, which would see the electronics conglomerate sell its media assets.
Loeb, who made his proposal after acquiring around $US1.1 billion in shares in the struggling Japanese electronics giant, proposed the tech giant sell off Sony Pictures and Sony Music, but Hiari rejected the plan.
The move also comes amidst a shakeout in the global PC market, with Gartner figures showing the global PC market contracted for the seventh consecutive quarter during the fourth quarter of 2013.
The horror quarter capped off a disastrous year for the sector, with full-year shipments for 2013 falling to 315.9 million units, down 10% from 351 million for 2012.