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Saturday, August 17, 2013

Sony May Be Split in Two Companies

Sony claimed that any financial results that show it making a profit for the first time in a few years shouldn’t actually be regarded as a comeback. The company said that its electronics division still faces hard times ahead and only had its nadgers pulled out of the fire by a very weak yen.

At the moment the company is facing pressure from activist shareholder Daniel Loeb’s proposal to split the company. The shareholder wants Sony to spin off 1/5 of its money into an entertainment division which will take care of the films, TV and music the company owns. Apparently, he believes that it will make the company more transparent and accountable.

In the meantime, Sony’s financial announcement might give some weight to his demands, as the company logged an operating profit of $370 million in the 2nd quarter of 2013. The company’s Xperia smartphones have sold quite well and Sony lowered its yen exchange rate on so-called assumptions that will boost its earnings from sales abroad while cutting costs.

The company claimed that its consumer electronics were in trouble and Sony had cut full-year sales targets for products from PCs to TVs to video cameras. The company’s chief financial officer Masaru Kato claimed that Sony did well first quarter results, although he sounds pessimistic about the future.

It is known that the company has been restructuring like a mad thing, and its TV business demonstrated the greatest progress from streamlining with an operating profit for the quarter. Actually, that was the first time it has made money in the last 3 years. In addition, the company admitted it expected its game division to fall into the red this year, because Sony would have to pay development costs over its new PlayStation 4 console.

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