After Eight Years Of Losses Analysts Call On Sony To Get Out Of TVs

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Sony who is struggling because of plunging TV sales is said to be looking for another TV partner, as analysts claim that the Japanese Company should get out of TV sales altogether.The Company who has never made a profit selling flat panel TVs has seen global sales of their Bravia TV fall from a forecast 27 million to 22 million during the past 12 months. In Australia brands like LG, Samsung and Sanyo are stripping TV market share away from Sony.

In the past Sony has partnered with Samsung and Sharp in the production of flat panel TVs. They also banked on 3D to give them an edge in the TV market.

The Japanese Company who has seen a 50% decline in their value is now attempting to reconfigure their TV production operations, development and sales, Chief Financial Officer Masaru Kato said in Japan yesterday.

Last week Sony slashed its profit forecast after saying that their TV division will lose money for an eighth straight year.

Bloomberg report that Sony who was once worth more than $100 billion, has lost half its market capitalisation since Stringer became its first non-Japanese chief executive officer in 2005.

The Tokyo-based company is now valued at $25 billion, less than a quarter the size of Samsung.

While analysts say Sony may climb 36 percent as sales of its PlayStation game consoles and Cyber-shot digital cameras bolster profit this year, stripping out losses at the TV business from the rest of the company would boost its equity to $43 billion, according to data compiled by Bloomberg.

By selling the TV division, Sony would exit a business that is forecast to lose almost a billion dollars this year as consumers unwilling to pay for its Bravia flat-screen TVs turn to cheaper brands.

“It’s been one of the losers,” Keith Wirtz, the chief investment officer at Fifth Third Asset Management, which oversees $18 billion and owns 40,000 Sony shares through its international equity fund, said in a telephone interview. “It’s hard for me to point to anything material that would suggest a turnaround or improvement.”

 

By selling the business, “they could redeploy the proceeds to more productive use. That’s the debate I suspect is going on at the senior management and board level,” he said.

“The TV business is one of the most important businesses for us and we have never considered walking out of such a business,” said Shiro Kambe, Sony’s chief spokesman in Tokyo, echoing comments that Chief Financial Officer Masaru Kato made to analysts last week. Stringer wasn’t available to comment on the story, Kambe said.

Stringer, a Welsh-born U.S. citizen, became Sony’s CEO in June 2005, taking over the company that invented the Trinitron cathode-ray tube TV in the 1960s and began selling the Walkman portable music player a decade later.

During the past six years, Sony has lost market share to Samsung and Apple as it struggled to win customers by betting demand for online content and 3-D technology would revive TV sales.

The company lagged behind LG and Samsung in the global TV market last year, with 12 percent of sales, according to DisplaySearch.

Mired in its worst earnings slump since becoming a publicly traded company in 1958, Sony is now valued at 25 billion, according to data compiled by Bloomberg. That’s about half what it was worth when Stringer took over.

At the same time, Samsung has grown almost 75 percent to $118 billion, and is now the world’s largest maker of televisions and flat-screen panels.

Apple, which introduced the iPod, iPhone and iPad over the past decade, surged more than 10-fold to become the world’s second-largest company with a market value of $362 billion.

‘Need to be Brave’

With Barclays Bank still projecting losses at the TV unit for two more years, Takashi Aoki, who helps oversee about $2.2 billion at Mizuho Asset Management. in Tokyo, said there’s little else Sony can do to turn around their TV business.

 

Aoki said the TV unit may generate interest from Chinese electronics makers, which have lower production costs and would be attracted to the Sony and Bravia brands. He declined to identify any potential buyers.

“Sony established their premium brand with the high- quality TVs that they produced, but unfortunately that’s become a generic business,” said Harris Private Bank’s Ablin. “From a pure financial basis, it doesn’t make sense for Sony.”

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