Sony Corp. acknowledged Wednesday what analysts have
been saying for months: It won't be a major player in smartphones, one of
the company's last hopes for turning around its troubled electronics arm. In
the latest of a series of downgrades to its earnings outlook, Sony said it
expected to post a loss of $2.15 billion—almost five times what it forecast
four months ago—for the current fiscal year as it wrote down the book value of
its mobile communications unit.
The Japanese electronics giant also said it wouldn't pay a
dividend in the current fiscal year for the first time since the company's
stock was listed in 1958. The company plans to cut about a thousand jobs in its
mobile business—about 15% of the unit's total workforce.
Chief Executive Kazuo Hirai says he wants to
rebuild the electronics arm, but he is running out of options. Earlier this
year, the company sold off its unprofitable PC unit and spun out the troubled
television business into a separate unit—a move that analysts said could be a
precursor to a sale. Sony also said it is trimming the size of its smartphone
business and aiming its phones at niche, high-end customers.
On the other hand, Sony's Hollywood studio remains solid,
its game division is recording strong sales of the PlayStation 4 console and
the imaging unit is benefiting from strong demand for sensors used in other
smartphones, including Apple Inc.'s iPhones.
Executives said Sony was struggling to compete with emerging
smartphone brands from China, which offer phones packed with many of the
features available in phones from Sony, Samsung Electronics Co. or
Apple, at a fraction of the price.
While the downward revision seemed to be a pattern under Mr.
Hirai, who took over as chief executive in 2012, some analysts were encouraged
by the move, saying it showed that the company's recently appointed CFO, Mr. Yoshida,
was taking a more realistic view of the company's prospects.
While several of Sony's Japanese rivals have exited the
mobile-phone business, Mr. Hirai said Sony was still counting on the mobile
unit to serve as a pillar of growth in electronics. Instead of trying to compete
with low-cost brands, the company will focus on high-end niches in selected
countries, he said.
This month, the company introduced a new premium model, the
Xperia Z3, along with an upgraded smartwatch at a trade show in Berlin.
So-called wearable technology has generated escalating buzz since Apple showed
off its own wearable device last week.A persistent problem for Sony's
smartphone unit has been its inability to break through in the U.S. market,
where Apple and Samsung dominate.
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