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Sony sells Vaio; to cut 5,000 jobs globally

February 06, 2014 20:14 IST

Sony sells Vaio; to cut 5,000 jobs globally

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In a move aimed at reinventing itself and cut mounting losses, consumer electronics giant Sony on Thursday said it will sell its personal-computer business and cut 5,000 jobs to save about $1 billion annually.

Sony, which forecast a surprise $1.08 billion loss in the year ending March 2014, will sell its PC business, which sells notebooks under the Vaio brand, to buyout firm Japan Industrial Partners and will split the television division into a separate unit.

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Photographs: Kind courtesy, Sony Corp

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The Japan-headquartered company will also streamline its TV business by improving cost efficiencies, rationalising R&D spend among others.

"Sony and JIP today concluded a memorandum of understanding confirming the parties' intent for Sony to sell to JIP Sony's PC business currently operated under the VAIO brand," Sony said in a statement.

The world's No. 3 TV maker has seen sales of its key products dip as it struggled to find new hits and consumers shift to mobile devices of Apple and Samsung. It has lost ground in the TV business as well in a contracting market.

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Photographs: Kind courtesy, Sony Corp
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The only bright spot was its new PlayStation 4 game console, which sold more than 4.2 million units in the first six weeks after its November release, outpacing competing machines from Microsoft and Nintendo Co.

As a part of the business transfer, Sony will stop planning, design and development of PC products and production and sales will also be discontinued after the Spring 2014 lineup to be launched globally, the statement added.

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Photographs: Kind courtesy, Sony Corp

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However, Vaio customers will continue to receive customer services and about 250-300 Sony Corporation and Sony EMCS Corporation employees involved in PC operations are expected to be hired by the new company established by JIP, it said.

As part of its cost optimisation drive, Sony will also reduce its global workforce. "....Sony is anticipating headcount reduction of approximately 5,000 (1,500 in Japan, 3,500 overseas) by the end of FY 2014," it said.

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Photographs: Kind courtesy, Sony Corp

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The company expects to take a hit of 70 billion yen in FY 2014 as restructuring expenses.

"Also Sony expects to allocate a further 70 billion yen (approximate) in restructuring charges in the fiscal year ending March 31, 2015, in order to implement these measures, which are expected to result in annual fixed cost reductions of more than 100 billion yen (approximate) starting in the fiscal year ending March 31, 2016," it said.

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Photographs: Kind courtesy, Sony Corp
Tags: Sony , Vaio

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According to analysts Sony's decision to sell its PC business is reasonable.

"The global PC market is dropping at the moment and when it comes to Sony, its worldwide PC market is small. Also the PC industry is moving towards consolidation with a few large players like Lenovo," Gartner Research Director Tracy Tsai told PTI.

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Sony has said it wants to concentrate on mobiles, gaming and imaging and the step to move away from the TC business seems reasonable, she added.

On TV business, Sony said its has been engaged in various cost reduction initiatives, as was first announced in November 2011.

"The initiatives include enhancing LCD panel-related cost efficiency and rationalising R&D expenses, while strengthening product competitiveness and operational efficiency in order to improve marginal profit ratio," it said.

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Sony said it aims to leverage its technical expertise and assets accumulated within the TV business as key differentiation technologies across its entire product lineup.

"In addition, to help transform this business into a more efficient and dynamic organisation, optimised in size and structure for the current competitive business environment and fully accountable for its operations, Sony has decided to split out the TV business and operate it as a wholly-owned subsidiary.

"The targeted timeframe for this transition is July 2014. By implementing these measures, Sony is aiming to further enhance its TV business' profit structure and return the business to profitability during FY 2014," it added.


Photographs: Kind courtesy, Sony Corp
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