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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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Problem with Sony
By Dug on 11/2/2011 3:12:28 PM , Rating: 2
The problem with Sony is true for so many of Japan's companies. They have gotten too big and they won't adjust to market.

People that fail in a Japanese company don't get fired, they just get moved to a different department.

To actually produce a TV is very simple, but I bet they have thousands of people working on one TV. That's why they have to sell so high and why they aren't making any money.

Seriously. It takes 3 very good engineers to get a TV ready. Another 3 for design. 3 or 4 for testing. But they have thousands. No wonder they fail.




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