Sony Corporation warned today it would book a USD 1.08 billion annual loss as it cuts 5,000 jobs and exits the stagnant PC market this year, as the once-mighty electronics giant struggles to reinvent itself in the digital age.
The shock news comes a week after Moody's downgraded its credit rating on Sony Corporation to junk, saying the maker of Bravia televisions and PlayStation game consoles had more work to do in repairing its battered balance sheet.
Japan's embattled electronics sector, including Sharp and Panasonic, has faced serious challenges from foreign rivals such as US giant Apple and South Korea's Samsung as they were outplayed in the smartphone and low-margin television business.
Sony Corporation said today the job cuts would save about USD 1.0 billion a year starting from early 2015, and announced the sale of its Vaio-brand PC division to a Japanese investment fund.
The deal with Japan Industrial Partners was reportedly worth between 40 billion yen (USD 400 million) and 50 billion yen. No financial details were disclosed.
Citing "drastic changes" in the computer market, Sony Corporation said it would concentrate on its lineup of smartphones and tablets and "cease planning, design and development of PC products". The firm is a small player in the global PC business.
Sony Corporation chief Kazuo Hirai said the moves were aimed at "accelerating the revitalisation and growth of our electronics business".
"But the environment surrounding electronics will get more severe and it will be hard for us to achieve the goal we set for our PC and TV businesses," he told reporters in Tokyo.
Sony Corporation said the TV business would not be profitable in the current fiscal year to March, in which it expects to lose 110 billion yen. The bulk of those losses are tied to restructuring costs.
Sony Corporation has pinpointed digital imaging, video games and mobile as the units which it hopes will lead a turnaround in its core electronics business.
Unlike Panasonic, which has abandoned consumer smartphones, Sony Corporation has seen buoyant sales of its Xperia offering and record sales for its new PlayStation 4 console.
Its entertainment arm, which includes a Hollywood studio, and a little-known insurance business also make money.
But Hirai, who has led a sweeping restructuring including asset sales that saw the USD 1.0 billion sale of Sony's Manhattan headquarters, has shrugged off pleas to abandon the ailing television unit. Today, he said Sony would strengthen its focus on the high-end TV business.