September 24, 2020

Sony to reduce TV, smartphone production

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Japan’s loss-making Sony has made plans to scale back its TV and cellular phone product offering to cut expenses, depending on multi-billion dollar revenue flows for its resurgent Playstation 4 and image sensor businesses over the next three years.

Having lost ground to nimbler opponents like Apple and Samsung Electronics in customer gadgets, Sony said on Tuesday its objective for TV and cell phones is to turn a profit, regardless of the possibility that sales could slide as much as 30%.

“We’re not aiming for size or market share but better profits,” Hiroki Totoki, Sony’s newly appointed chief of its mobile division told an investors’ conference. A poor showing by its Xperia smartphones has weighed heavily on recent earnings and Sony said more detail on plans for the unit will be unveiled before end-March.

With cost cuts on the way in some divisions, Sony is also not planning to renew its FIFA soccer sponsorship contract next year, people familiar with the matter told Reuters.

Under its new three-year electronics business plan, Sony said it was aiming to boost sales for its videogame division by a quarter to as much as 1.6 trillion yen ($13.6 billion). It said that will be helped by personalised TV, video and music distribution services that should lift revenue per paying user.

At its devices division, which houses its image sensor business, Sony said sales could increase 70% to as much as 1.5 trillion yen. Sony’s sensor sales are already robust, with Apple using them in its iPhones while Chinese handset manufacturers are increasingly adopting them.

In a similar event last week for its entertainment units, the conglomerate said it was aiming to lift its movie and TV programming revenues by a third over the next three years.

Shares in Sony finished 6% higher on hopes that the new measures show a greater sense of restructuring urgency, while the Nikkei 225 index rose 0.3%.

“There’s a lot of expectation for Sony now, but nothing is sure until there are results,” said Ichiyoshi Asset Management chief fund manager Akino Mitsushige. “Getting out of the mobile market is an option, but they can’t do that now, so they will need to make some fundamental changes.”

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