The first step in solving a problem is admitting that a problem exists in the first place. Sony took that first step Wednesday as it announced that it will be implementing a massive impairment change for its smartphone business which has not been performing as expected despite rapid expansion in the market.
Chief executive officer Kazuo Hirai reiterates that mobile will still be one of the core divisions of Sony's electronics business although growing losses threaten the company. In fact, for the first time since 1958, Sony will not be paying dividends.
For the year ending in March 31, Sony widened its anticipated net loss by $2.15 billion, a figure almost five times what it had previously announced. Smartphone sales forecasts for the year have also been reduced to 43 million units.
The impairment charge the company announced amounts to $1.7 billion. Sony had a lot riding on its mobile business, tagging it an important piece of Hirai's restructuring plan which was supposed to be completed this year. Hirai, however, is not giving up.
"I will be at the centre of making sure that restructuring will be completed this year and that we will turn a profit in the next financial year. A recovery is my responsibility. This is the first time we've not paid a dividend and we feel that responsibility as management very heavily," he said.
It looks like Sony's in a lot of trouble but analysts still feel that chief financial officer Kenichiro Yoshida is doing good work after just joining the company in April. Yoshida's plans are at least on track because he is able to control expansionists in Sony, which if left unchecked can bring in bigger losses for the company.
As part of Sony's strategy to bounce back, it will also be cutting out 1,000 employees from its mobile unit for the current business year. Further details about this move will be outlined when the company shares its results in October for the quarter ending in September.
Sony also has three Xperia Z3 smartphones and tablet models in the works, lined up to be released in the fall, as well as a new SmartBand device. For the first time too, one of these Xperia Z3s will be making its way to the United States through a carrier. The undisclosed model will be available through T-Mobile and will be sold at the same time across the globe instead of months later.
