Grace Huang and Yuji Nakamura Tokyo
SONY chief executive Kazuo Hirai is running out of options to turn around Japan’s iconic consumer electronics maker.
The Tokyo-based company said yesterday that it would report a wider full-year loss of ¥230 billion (R23.4bn) because it was writing down the value of its faltering smartphone business. Sony also said it would not pay an annual dividend for the first time since its listing in 1958.
Its shares in Germany were headed for their biggest drop in more than five years.
Hirai has been working to turn around Sony by emphasising entertainment and game content, consoles and mobile devices as demand for televisions and compact cameras has declined. With the Xperia smartphone line-up struggling, his other options for reviving the company are Hollywood movies, music and the PlayStation video-game business.
“Sony should have done it earlier,” said Masahiko Ishino, an analyst at Advanced Research Japan. “A lot of people were questioning why it didn’t write down the mobile goodwill earlier as the business hasn’t been doing well since the beginning of the fiscal year.”
German-traded shares of Sony fell 11 percent by 11.46am in Frankfurt. In Tokyo, the stock dropped 1.8 percent to ¥2 123.50, paring a 16 percent gain this year.
Sony was taking a ¥180bn impairment charge because it expected less cash from the smartphone business, the company said.
Hirai said the company was cutting about 1 000 workers from the 7 100-person unit and reducing the number of mid-range models as Chinese manufacturers gained global market share.
“With regards to competition, while there are many forces at play, one of them is Chinese smartphone makers who, especially within the Chinese market, are dramatically breaking through,” Hirai said.
Xperia devices command about 3.1 percent of the global market for smartphone shipments, and Sony earlier this year revised its annual sales forecast down to 43 million units from 50 million.
Sony has been passed in smartphone sales by Chinese makers including Huawei Technologies, Lenovo Group and Xiaomi, that offer feature-packed devices for as low as $100 (R1 093).
Beijing-based Xiaomi, the top seller in China, plans to boost its global sales to 100 million units next year.
Sony’s mobile products unit posted a loss of ¥2.7bn in the first quarter.
The company is not paying a dividend this year after paying ¥25 a share last year. Hirai said his “number one responsibility” was to reinstate the dividend.
Sony trails Samsung and Apple by a wide margin in global smartphone sales, ranking ninth in the second quarter. – Bloomberg