Sony warns of "painful" decisions to turn TV business around

by Steven Williamson on 10 February 2012, 12:12

Tags: SONY UK (T.V), Sony (NYSE:SNE)

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Stepping into the role of Sony Corp’s new president and chief executive officer early this month, Kazuo Hirai has some incredibly important decisions to make after a disappointing third-quarter financial report saw the company record losses of $2.03 billion across its core businesses.

No business was more affected than the Consumer Products & Services Group, which accounted for more than half of Sony’s overall losses and includes the PlayStation brand and the failing TV business.

Hirai has already detailed a four-point plan to turn the company around by re-enforcing the core businesses, realigning its business portfolio and accelerating innovation. There will also be a huge focus on the restructuring of Sony’s TV businesses, which has made a loss for the eighth consecutive year and is expected to be the main contributor toward its full-year net loss forecast of 220 billion yen ($2.9 billion.)

Profits on Sony’s LCD, LED and Smart TVs have been dwindling over the past few years with the lack of demand in developing countries and stiff competition from companies, including Samsung and LG, said to be a major factor.

Speaking to reporters at the firm’s Tokyo headquarters this week, Hirai said that he won’t abandon the TV business and aims to get it back in the black by 2014.


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"I view televisions as very important and an integral product category for Sony," Hirai said.

"It's one device that most consumers have in their home to enjoy all their visual content, sometimes audio content as well.

"And so I think it's very difficult to imagine Sony getting out of the TV business. It's basically at the centre of every entertainment experience."

To turn a profit, Hirai warns that “a hard and painful decision” will be needed to cut costs in the TV business.
 
“Pain can come in many ways,” he said. "We have to make some hard decisions on where there are redundancies and reduce the fixed costs in a variety of different areas."

Sony warns that the cost-cutting could have a major impact across its supplier and manufacturing chain.

Phase one of the plan to turn things around began last year as Sony split its TV business into three units; LCD TVs, outsourcing operations, and next-generation TVs.

Earlier this week, Sony had its credit rating cut by Moody’s Investors Service, Standard & Poor’s and Fitch Ratings.


HEXUS Forums :: 15 Comments

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Posted by Brewster0101 - Fri 10 Feb 2012 12:36
Sony is a company that had relied on its name and brands (such as playstation) too much that the names would help sell products regardless how good they are. For a number of years they have refused to wake up and realise that their competitors were offering better, cheaper products and quite frankly better support.
The brand Sony is nothing in 2012 compared to 10 years ago or more.

I don't think Kazuo Hirai will change the fortunes of Sony. Sony is on the road that Kodak is on.
Posted by Hicks12 - Fri 10 Feb 2012 12:59
Think you summed it up nicely Brewster, they were to confident on their name being everything and when you walk into places like richer sounds you see sony displays selling for stupid amounts where as you can get a better performing(looking) panasonic plasma or less or in terms of LCD the samsung or LG are decimating, basically they both look epic compared to one another just that LG offers passive 3d and samsung active 3d.

Sony needs to half their prices to get anything useful in terms of sale from the tv market. I think they will do much better with the PS4 on the basis that people are still peeved about playstation network hacking etc, its damaged their name massively… possibly unrecoverable!
Posted by Lee H - Fri 10 Feb 2012 13:55
Sony started to go downhill quickly when they went down the route of using their own proprietary flash storage on their devices for which they had the cheek to charge premiums on.

As for the TV Market, they totally underestimated the rest of the other manufacturers and stagnated while LG and Samsung came on leaps and bounds.
Posted by shaithis - Fri 10 Feb 2012 13:56
I remember back in the day when most people had a Sony amp, Micro system, midi system or some component or other in their AV racks……it's been a good decade since that was the case though with number dwindling all the time.

I am amazed it's taken them until 2012 to do something major about it!
Posted by Brewster0101 - Fri 10 Feb 2012 14:21
Lee @ SCAN;2302157
Sony started to go downhill quickly when they went down the route of using their own proprietary flash storage on their devices for which they had the cheek to charge premiums on.

This is Sony thinking they can change the world with every technology they make since their success with the Walkman. They've had so many proprietary format fails, it must be hard for them to keep count. I guess they're having semi success with bluray too. They must spend an awful lot of money on development of junk.

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