Daily Management Review

Sony Flags Next Year As make-or-break Year for Its Smartphone Business


Sony could consider other options for the smartphone unit if it failed to turn profitable next year.
Chief executive of Sony Corp said that identified 2016 as a make-or-break year for its struggling smartphones.
With recent results showing improvement thanks to cost cuts, an exit from weak businesses such as PCs, as well as strong sales of image sensors and videogames, Sony Chief Executive, Kazuo Hirai has engineered a successful restructuring drive at the company after years of losses.
While there have been signs of revival for other units, the smartphone business has been slow to turn around.
"We will continue with the business as long as we are on track with the scenario of breaking even next year onwards. Otherwise, we haven't eliminated the consideration of alternative options," Hirai told a group of reporters on Wednesday in Tokyo.
Cheaper Asian rivals as well as the likes of Apple Inc and Samsung Electronics have provided stiff competition to Sony and other Japanese electronics makers to the extent that the Japanese companies have struggled to compete and stay competitive and yet profitable.
According to company data last year less than 1 percent of the smartphone market in the North America and just 17.5% of the market in Japan were held by Sony phones including its Xperia-branded smartphones.
From an earlier estimate of a 39 billion yen loss for the current fiscal year, the Japanese electronics giant in July lowered its forecast for its mobile communications unit to an operating loss of 60 billion yen.
"I do have a feeling that a turnaround in our electronics business has shown progress. The result of three years of restructuring is starting to show. But we still need to carry out restructuring in smartphones," said Hirai.
Meanwhile another former mobile phone giant Nokia is also running a restructuring process and on Wednesday the Finnish network equipment maker said that its executives would dominate the new leadership team once it completes its proposed acquisition of Alcatel-Lucent.
The company would retain its chief financial officer Timo Ihamuotila while at least 10 out of a total 13 members in the planned group leadership team belong to the Nokia team.
Networks business and Nokia Technologies, which includes patents and new technologies are the two divisions that Nokia would announce results for.
Mobile Networks, Fixed Networks, Applications & Analytics and IP/Optical Networks would be the four business divisions of Nokia’s networks division with a combined sales organization.
Nokia expects to operate the undersea cables business as a separate entity as Alcatel, which had previously planned to sell a majority stake in the business, had decided on Tuesday to keep it.
The 15.6 billion euro ($17.55 billion) all-share acquisition of Alcatel-Lucent is expected to be closed in the first half of next year.
(Sources:http://timesofindia.indiatimes.com & www.reuters.com)