Sony to Sell Off Vaio and Spin Off Bravia TV Division

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According to a news release from Sony Corporation yesterday, the Japanese company are engaged in “significant new measures to address reform of its PC and TV businesses aimed at accelerating the revitalization and growth of its electronics business.”

The release continues to say that “Sony has launched high value-added products that bring together the best of Sony’s technological strengths and introduced new market-leading platforms and business models. At the same time, Sony identified PCs and TVs as businesses for which profitability improvement would be a key priority and implemented various reform measures. The reforms executed within the TV business have significantly enhanced its operational structure and product competitiveness. However, Sony now anticipates its target of returning the TV and PC businesses to profitability will not be achieved within the fiscal year ending March 31, 2014.”

The end result of these conclusions is that Sony will sell its Vaio laptop computer division to Japan Industrial Partners Inc. (JIP) and spin off its Bravia television division as a wholly-owned subsidiary.

The television business has not made a profit since 2004, but Sony chief executive Kazuo Hirai was bullish about its future. “I think we are heading in the right direction, and by making it a separate company we will speed decision-making up,” Hirai told reporters in Tokyo. “As for the future, there are many possibilities, and not just for our TV business.”

While Sony now anticipates that its target of returning the TV business to profitability will not be achieved within FY13 largely due to unexpected factors such as the slowdown in emerging markets and declining currency rates, the reforms executed within the TV business over the past two years are putting the business on a path to turnaround. In particular, Sony has significantly enhanced product competitiveness and accelerated its shift to high-end models, especially in the area of 4K, where Sony has secured more than 75% market share in Japan (as of the end of December 2013, based on Sony research). Sony has also taken the number one market share in the US for 4K models (during calendar year 2013, based on revenue).

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