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After eight years of quarterly losses, the company is a bit worried

The LCD era has not been kind to Sony Corp.'s (TYO:6758) television unit. Sony has a hand both in manufacturing LCD displays -- via a joint venture with Samsung Electronics Comp., Ltd. (KS:005930) -- and, like Samsung, in selling assembled LCD TVs.  Unfortunately, Sony's LCD ambitions have failed to produce a single annual profit eight years into the experiment.

Faced with its eighth year in a row of losses, Sony is shaking up its TV division.  According to a report by the business daily Nikkei, Sony is negotiating with Samsung on a buyout of its 50 percent manufacturing stake in the LCD joint.

In terms of official changes, Sony has committed to immediately splitting its TV unit into three new units.  One unit will be tasked with sales of LCD TVs, another will head outsourcing manufacturing to cheaper foreign facilities, and a third unit will be charged with developing future TVs.

Sony spokeswoman Ayano Iguchi comments, "By dividing into three divisions, we will make clearer the mission and responsibilities of these."

Sony has suffered from a variety of problems this year.  Some -- like a strong yen, which cuts into profits, and faltering consumer confidence due to the global recession -- have affected the company's peers in Japan and abroad.  Other problems are more unique to Sony, such as the series of massive privacy breaches [1][2][3][4][5][6][7][8] that occurred earlier this year when Sony lost approximately 100 million gamers' personal information, including credit cards for some.

The company's TV unit has also had some expensive recent misfires.  After being the first Japanese manufacturer to go commercial with an OLED TV design, Sony has pulled the plug on the project for now, after disappointing sales.  Likewise, Sony's Internet TV project with Google Inc. (GOOG) has struggled mightily in sales.

Sony Internet TV
[Source: Stuart Ramson]

Given these diverse factors conspiring to cut into Sony's profits, analysts are predicting the company to fall short of its predicted ¥200B ($2.555B USD).  

In the past Sony could afford to pour money into its struggling LCD TV venture.  But with its budget tightening, the company its pondering the first in what may be a series of major cuts and changes.

Source: Nikkei via Reuters

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Sony Quality < Brand Prestige
By dark matter on 11/1/2011 7:37:27 PM , Rating: 1
With a household brand name that "sony" has, it was kind of inevitable.

It appears that the Directors of Sony, tried too hard to appease the shareholders and the markets, by using the Sony brand, but selling 3rd rate products and thinking they can pocket the difference.

Major Shareholders (think 1% of the population of the US) are no longer capitalists. As no right minded capitalist would piss 30 years of brand recognition down the drain by using "efficiency drives" just so you can make a unrealistic growth forecast for Q4.

Whenever a company embarks on the seemingly holy grail of modern markets called "efficiency drives" they actually mean "cutting corners" in everyday language. Those corners don't come of the price tag, but instead go into their pockets.

Short term, they win, long term, people get sick of paying for missing corners, and their goes the goose, along with the golden egg. Yet the directors sit there scratching their heads why the gullible masses are no longer buying, yet still award themselves %50 price rises and big bonuses.

The system is fucked. And the greedy 1% are to blame.

By espaghetti on 11/1/2011 8:12:26 PM , Rating: 5
You had a good point until the end.

RE: Sony Quality < Brand Prestige
By idiot77 on 11/2/2011 2:19:35 AM , Rating: 1
Ok, I'm all about supporting the 99% and Occupy, etc... but wtf does that have to do with this article?

Don't be brainless... gives the hard work being done a bad name.

RE: Sony Quality < Brand Prestige
By Penti on 11/2/2011 7:22:01 AM , Rating: 1
The wealthy have never been capitalists and capitalism they create do not strive for a common good or general welfare. They just follow Americas lead off outsourcing, selling out or downsizing and do off with anything innovative or anything giving you a competitive advantage.

In Japan they have come together Sony, Toshiba and Hitachi, and put all the small LCD manufacturing (mobile phones) in a single company and merged essentially loosing their own identity and driving force to compete with Sharp and foreign LCD-panel makers, or at the very least ensure that most of those companies will loose control over the new subsidiary/jointventure and exit the business altogether soon. Other companies have merged and wounded down and downsized operations loosing their capabilities and so on. If they aren't producing any technology they aren't they are simply left out. There is a good reason why countries like Korea, Taiwan and China do take over high-tech industries. Japan aren't out of the game yet, but of the large panel makers there just is Sharp and Matsushita/Panasonic left basically. Toshiba stopped making large panels a few years ago for example.

It was a long time ago S-LCD had plants in Japan now. Assembly plants in the entire business have mostly been sold off, or outsourced to EMS-companies. When they have nothing left they will simply don't hold anything driving into the feature new technologies or have the force to develop anything. They will loose their competence. Happens everywhere. They will have to find something new to do if they want to be around. But if they want to be left they will eventually have to spend money on doing something themselves rather then downsize to save money and send your money to other companies. The companies have already gone down the road off getting rid of their capacity it's hard to turn that around once you has, if you don't invest in your future you won't have much of one. Others will invest and acquire the skills.

RE: Sony Quality < Brand Prestige
By karndog on 11/2/2011 11:39:08 AM , Rating: 1
I doubt the % of major shareholders is even 1% of the US population. Even .5% would be generous.

"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive

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