Sony sells VAIO; to cut 5,000 jobs globally including India

Sony-sells-Vaio

In a move aimed at reinventing itself and cut mounting losses, consumer electronics giant Sony Thursday said it will sell its personal-computer business and cut 5,000 jobs to save about $1 billion annually.

Sony, which forecast a surprise S1.08 billion loss in the year ending March 2014, will sell its PC business, which sells notebooks under the Vaio brand, to buyout firm Japan Industrial Partners and will split the television division into a separate unit.

The Japan-headquartered company will also streamline its TV business by improving cost efficiency, rationalizing R&D spend among others.

“Sony and JIP Thursday concluded a memorandum of understanding confirming the parties’ intent for Sony to sell to JIP Sony’s PC business currently operated under the VAIO brand,” Sony said in a statement.

The world’s No. 3 TV maker has seen sales of its key products dip as it struggled to find new hits and consumers shift to mobile devices of Apple and Samsung. It has lost ground in the TV business as well in a contracting market.

The only bright spot was its new PlayStation 4 game console, which sold more than 4.2 million units in the first six weeks after its November release, outpacing competing machines from Microsoft and Nintendo Co.

As a part of the business transfer, Sony will stop planning, design and development of PC products and production and sales will also be discontinued after the Spring 2014 lineup to be launched globally, the statement added.

However, VAIO customers will continue to receive customer services and about 250-300 Sony Corporation and Sony EMCS Corporation employees involved in PC operations are expected to be hired by the new company established by JIP, it said.

As part of its cost optimization drive, Sony will also reduce its global workforce. “…Sony is anticipating headcount reduction of approximately 5,000 (1,500 in Japan and 3,500 overseas) by the end of FY 2014,” it said.

The company expects to take a hit of 70 billion yen in FY 2014 as restructuring expenses.

“Also Sony expects to allocate a further 70 billion yen (approximate) in restructuring charges in the fiscal year ending March 31, 2015, in order to implement these measures, which are expected to result in annual fixed cost reductions of more than 100 billion yen (approximate) starting in the fiscal year ending March 31, 2016,” it said.

According to analysts Sony’s decision to sell its PC business is reasonable.

“The global PC market is dropping at the moment and when it comes to Sony, its worldwide PC market is small. Also the PC industry is moving towards consolidation with a few large players like Lenovo,” Gartner Research Director Tracy Tsai told PTI.

Sony has said it wants to concentrate on mobiles, gaming and imaging and the step to move away from the TC business seems reasonable, she added.