Sony Corp. earnings are “moving in the right direction” as it accelerates a plan to turn around its unprofitable TV business, Chief Executive Officer Kazuo Hirai said.
Sony, Japan’s biggest exporter of consumer electronics, also is “mindful of our cash position” as it makes deals such as its agreement reached last Friday to invest ¥50 billion in Olympus Corp., Hirai said Tuesday at the CEATEC high-tech exhibition at Makuhari Messe in Chiba Prefecture.
The company is selling businesses, including a chemical products division for ¥57.2 billion, to generate cash, he said.
Hirai is reorganizing Sony’s business holdings as the company seeks to recover from four straight annual losses because of slumping demand for TVs, a stronger yen and competition from Samsung Electronics Co. and LG Electronics Inc.
The CEO, who took over in April, vowed to stay in the TV business and promoted an 84-inch Bravia set that will start selling in Japan next month for ¥1.68 million.
“We’re certainly committed to the TV business,” Hirai said. “Sony has a very deep DNA in creating the best picture and the best sound.”
The new set uses 4K technology that Sony says displays higher-resolution images than conventional high-definition models. Sony sees growing demand for larger sets in developed markets such as North America and Japan, and better picture quality will help lure buyers, said Masashi Imamura, a senior vice president in charge of Sony’s home entertainment products.
“I can’t be optimistic,” said Nobuo Kurahashi, an analyst at Mizuho Investors Securities Co., who rates Sony neutral, or hold.
“It’s possible that the TV revitalization plan may be ahead of schedule, as the targets may be conservative,” Kurahashi said. “However, it doesn’t mean that Sony as a whole is doing well.”
Panasonic Corp. and Sharp Corp., which also are losing money in TVs, are using the CEATEC exhibition to showcase their profitable home appliances, including network-connected refrigerators.
“Japanese consumer makers have abandoned their old habit of lining up TVs to compare each other whose is the biggest,” said Yoshiharu Izumi, an analyst at JPMorgan Chase & Co. in Tokyo. “Each company has a different message this year, depending on their expertise. For Sony, it’s the expertise used in high-end professional products leading to the new 4K set.”
Sony said in August its main TV operation may lose about ¥80 billion this business year, which ends March 31, a ninth straight year of losses, adding to about ¥700 billion in losses since April 2004. Hirai is reducing the number of models and has sold stakes in display ventures as he tries to make the unit profitable in the year ending March 2014.
“We are ahead of plans in turning the TV business around,” Hirai said, without giving specifics.
“There are differences in product categories, but overall I think we are moving in the right direction,” he said when asked about the company’s full-year earnings outlook.
The company sold its stake in a liquid crystal display venture with Sharp in June after Sharp turned to Taiwan’s Foxconn Technology Group for a capital alliance that included the sale of a stake in the venture.
Sony ended a similar panel venture with Samsung last year as part of its plan to trim losses at the TV unit. Hirai has said the sale of that stake to the South Korean company will save about ¥50 billion.
In June, Sony agreed with Panasonic to develop TVs using organic light-emitting diode panel, or OLED, screens. The partnership, the first between the main TV operations at the two companies, is progressing smoothly, Hirai said.