Sony has revised forecasts for the end of the financial year to a loss of $ 1.1 billion. They have subsequently confirmed the sale of their Vaio PC business, and revealed new plans to spinoff their television business.
While the company still believes sales will be a solid 7.7 trillion yen, their operating income is 80 billion yen, half the October forecast of 170 billion yen. Likewise, their new 110 billion yen net loss forecast is down from their October forecast of 30 billion yen profit.
Playstation 4’s launch and subsequent sales are a bright spot for the company this quarter, with 4.2 million units sold and growing. However, the performance of their gaming division is now compromised by the failure of their other consumer products.
Most notably, Hirai pledged to turn around their ailing TV business, as planned as far back as 2011, and failed. Sony does vouch they have stemmed losses from said business from 147.5 billion yen in March 2012, to a projected 25 billion yen this year, but it’s still a loss. Their entertainment business, which was the subject of Loeb’s plans for a spinoff, also ended up reporting a loss with the failure of films like White House Down and After Earth.
Sony has released press releases regarding their PC and TV plans. Regarding PC, they have confirmed Vaio will become a new company to be formed by Japan Industrial Partners. Sony is set to invest 5 % of the new company’s initial capital. 250 to 300 of Sony’s employees will move into the new company, and they will end manufacture and sales internally after they release their Spring 2014 lineup.
Regarding TVs, Sony does not see a return to profitability in FY2013, but there is enough promise to keep their stake in the business. Therefore, Sony is spinning off the business into a wholly owned subsidiary. They will continue their push in 4K, where Sony claims to have 75 % of the market, and expand into emerging markets, as well as continue efforts to reduce operational costs.
Finally, as perhaps an ironic turn, while Sony will find ways to retain some Vaio employees, they are also set to cut 5,000 more jobs overall.
Between Sony, Microsoft, and Nintendo, the gaming business is in a truly volatile place. All three are experiencing radical changes as they seek better profitability in the age of smartphones, and their approaches are as diverse and untested as they themselves are different from each other. We hope to see them, each in their own way, make this into one of the best times for gaming as well.
