Sony, A Dying Brand The Prognosis Is Not Good

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Sony Australia boss Carl Rose has given little if any interview about the performance of his local operation during the past 18 months, and when he has, he has failed to talk about the serious problems Sony is facing.Back in September 2000 when we were first planning the launch of SmartHouse Sony, was worth $100 billion It is now valued at only $18 billion and slipping.

In comparison, Apple’s stock price was $7 in 2000 today the stock price is $392 and the Company is valued at $364 billion and Samsung at $137 billion.

Sony is a struggling brand that is being hit on one side by Samsung and LG and by Microsoft, Google and Apple on the other.

Three years ago when we first tipped that Sony was in trouble the Company chose to ban us in an effort to silence us. There stock value lack of sales and innovative products coupled with their lack of profits speaks for volumes for the health of the Japanese Company. 

Gone are the days when Sony was an innovative Company that both consumers and the CE industry followed.

 Today, you are more likely to find Sony Bravia TVs in discount shops as LG and Samsung with their Smart TVs strip market share and brand credibility away from the Japanese Company.

Next year Apple is tipped to launch a Smart TV that will strip further TV share away from Sony while brands like Apple, Motorola, Samsung and Toshiba along with Acer and Asus are all set to outperform Sony in the Android tablet market.

Globally, Sony is set to announce further losses as the Company desperately seeks new revenue streams to replace their loss making product divisions.    

This year  Sir Howard Stringer Chief Executive Officer of Sony has announced acquisitions worth $8.4 billion with analysts predicting that it is not enough to turn around a company heading for a fourth consecutive loss.

All that is left in the Sony kitty is $16.9 billion of cash and equivalents at the end of September, according to Bloomberg data. When this runs out Sony will be forced to borrow, or sell with several Analysts tipping that Sony will be sold.

Recently Sony indulged in its biggest purchase yet, spending $4.5 billion on patents concerning tablet and smartphone technologies to join a consortium including Apple, Microsoft, Research In Motion, Ericsson and EMC. 

Stringer’s efforts to bulk up profitable from content such as music and movies comes at a time when Western markets like Australia the USA and Europe move to Korean made brands for their TV and home theatre purchases.

In the phone market it is brands like HTC, Apple Motorola and Samsung that is getting the attention of consumers, not Sony or the Sony Ericsson brand.

 

 

This week Sony was forced to slash its sales forecast for Bravia TV’s and predict an eighth straight year of losses in the business. Sony has lost $5.1 billion in the past three years and predicts adding more this year.

In a desperate move to reinvent itself Sony is set to pay cash to control its mobile-phone venture with Ericsson; they are also set to partner with Michael Jackson’s estate in an effort to buy the music assets from EMI Group.

If successful the move could be a blow for Samsung Australia who has a current relationship with EMI as both Companies market a new streaming service for Samsung devices.

BusinessWeek recently reported “Acquisition is the wrong direction for Sony,” said Edwin Merner, president of Atlantis Investment Research in Tokyo, which manages $3 billion. “Sony must concentrate only on a few electronic products; maybe even get out of the manufacturing business.”

Sony Music, featuring Jackson, Jimi Hendrix and Kelly Clarkson, was the second-biggest contributor of operating income at Sony after financial services during the fiscal year that ended in March. Sony Pictures, producer of “The Smurfs,” “The Social Network” and “Spider-Man,” was the third-biggest.

In October, the maker of Xperia phones agreed to spend $1.5 billion in cash to purchase Ericsson’s 50 percent stake in their mobile-phone venture and integrates the smartphone business with its gaming and tablet offerings.

Other deals this year include the $118 million purchase of a Seiko Epson. Subsidiary in China and a $63 million deal with Toshiba, according to data compiled by Bloomberg.

“We will consider mergers and acquisitions in any area and business that is necessary for growth so as to strengthen our existing operations and technology and create a new business,” Mami Imada, a Sony spokeswoman, said by phone.

Earlier this month Sony lowered its annual sales projection for Bravia TV’s to 20 million sets from 22 million.

Now the company is considering plans to write down the value of its bleeding TV business while reducing the number of Bravia models they sell.

“I have unflagging resolve” to turn the TV business around, Executive Deputy President Kazuo Hirai said Nov. 2. Sony’s management “feels a sense of crisis” about the unit’s losses, he said.

 

 

 Keita Wakabayashi, an analyst at Mito Securities in Tokyo told BusinessWeek that TVs are “the business that Sony simply can’t exit.”

“Television is the key,” said Wakabayashi, who doesn’t rate Sony. “It is at the centre of the strategy to integrate hardware and software.”

That integration will help Sony take on rivals, including Apple, Stringer said last month at Berlin’s annual consumer electronics fair. He can draw on music from 13 U.S. labels and movies from Sony Pictures Classics, Columbia Pictures and TriStar Pictures.

“Apple makes an iPad, but does it make a movie?” he said. “We will prove that it’s not who makes the tablet first who counts, but who makes it better.”

Sony sells music and movies through Apple’s iTunes store, keeping 70 percent of the sales while Apple gets the remaining 30 percent. It also is expanding its online-music business by forging a partnership with Google.

Sony needs to do more to “blend” those assets with its hardware in order to compete with its bigger rivals, Akino said.

“The company’s culture is to polish the technology,” he said. “The company doesn’t have the speed to catch up with Apple and Samsung.”

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