SONY LOSS

Sony posts hefty loss on smartphone write-down
Published: Oct 31, 2014 3:51 a.m. ET



By
MARKETWATCH

TOKYO-- Sony Corp. reported a hefty net loss of Yen136.0 billion ($1.2 billion) for the July-September period as it wrote down the Yen180 billion book value of its struggling smartphone business.

The outcome was narrower the Yen148.06 billion loss forecast by analysts. Markets had factored in a big loss since the electronics maker announced the write-down in September. In the same quarter a year ago, Sony recorded a Yen19.6 billion loss.

Restructuring the troubled Xperia handset business is an urgent task for the Japanese conglomerate. Chief executive Kazuo Hirai named the mobile segment as one of the three pillars of the company's future, and Sony had ambitions of taking the third-largest global market share after and Samsung and Apple.

But faced with increasing competition from lower-cost Chinese makers, Sony acknowledged that its strategy had been wrong, and it would no longer seek such a large piece of the pie, signaling it would decrease its presence in some emerging markets. In the three-month reporting period, the mobile segment recorded a net loss of Yen172.0 billion.

The latest data from market research company International Data Corporation show that China's Xiaomi was the third-largest smartphone provider, with a 5.3% share in terms of shipment volume during the three-month period ended in September. Samsung had a 23.8% share and Apple had a 12.0% share.

Sony cut its smartphone sales target for the full year ending March to 41 million units, the second downward revision this business year. In the previous quarterly announcement it lowered the target to 43 million units from 50 million.

Analysts welcomed the change, saying the previous forecasts were too optimistic. The downward revision suggests the company is becoming more realistic in assessing its market position and moving toward cost efficiency. However, it is still unclear whether it will be enough to initiate a turnaround.

Signaling drastic changes to come in the mobile segment, the company announced that Senior Vice President Hiroki Totoki would be the new head. Mr. Totoki most recently worked behind the scenes to implement the company's structural reforms.

Apart from the loss-making mobile business, the company's other two pillars--the PlayStation business and the image sensor business--remain robust. They recorded operating profits of Yen21.8 billion and Yen29.6 billion respectively, from a loss of Yen4.2 billion and a profit of Yen11.9 billion a year ago.

Write to Takashi Mochizuki at takashi.mochizuki@wsj.com

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Corrections and Amplifications

This item was corrected at 07:26 GMT. The original gave erroneous percentage figures in the fifth paragraph.

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"Sony Posts Hefty Yen136B Loss for July-Sept After Smartphone Business Write-Down," at 0622 GMT, gave erroneous percentage figures in the fifth paragraph. The paragraph should have read as follows: The latest data from market research company International Data Corporation show that China's Xiaomi was the third-largest smartphone provider, with a 5.3% share in terms of shipment volume during the three-month period ended in September. Samsung had a 23.8% share and Apple had a 12.0% share.