Sony Restructures To Hide Mobile Performance; Closes Smartphone Factory



Sony restructures to hide mobile performance; closes smartphone factory

Sony has announced that it will combine its mobile business with its imaging and TV businesses starting from 1 April 2019. The move will see the Imaging Products & Solutions (IP&S), Home Entertainment & Sound (HE&S) and Mobile Communications (MC) businesses merge to combine one unit called Electronics Products & Solutions (EP&S).



EP&S will be headed up by Shigeki Ishizuka (currently in charge of imaging), with Ichiro Takagi serving as deputy (currently in charge of TV). So what does this mean in practice? Well it should ensure even closer levels of collaboration between Sony’s divisions, enabling its smartphone business to leverage the best technologies from its imaging and TV stable.

However, on the flip side, it means that Sony will now mask the financial and operating performance of the mobile division making it easier for the company to push back on those wanting Sony to close it due to ever-mounting losses.

Jefferies’ analyst Atul Goyal recently downgraded Sony on concerns over the mobile division. "Sony’s unwillingness to exit Smartphones is a disappointment and a strategic mistake, in our view," Goyal said in a note last week.

In addition, Amir Anvarzadeh, strategist at Asymmetric Advisors said: "By hiding the mobile-related losses, they would take the pressure off from shareholders to shut the division down. Nevertheless, the losses are bound to rise further."

Sony have hit back though, with spokesperson Takashi Iida saying: “Through more cooperation among our divisions, we can create new value by better utilizing the combined assets and personnel in our electronics area. More interaction among employees will also lead to the development and growth of our staff.” He also said that they will continue to disclose results for the mobile division “for the foreseeable future.”

Apparently Sony will provide more information on what it intends to disclose on 26 April 2019, when it releases full year results. However, there is a good chance that this will no longer include transparency on units sold for example. Given how much the smartphone business has shrunk over recent years, this news does not come as a particular surprise, but it means it will become even harder to assess how Sony’s mobile business is faring.

The last set of results from Sony Mobile were horrendous, and this is likely the reason behind reports citing that Sony will be closing its smartphone factory in Shanghai in order to save costs. Production will stop by the end of the month, leaving only its plant in Thailand. Sony will continue to outsource to other manufacturers.

In other news, Sony also announced that Kazuo (Kaz) Hirai will be retiring from his role of Sony Chairman. Despite the move, Kaz will continue to act as a Senior Advisor to the company.

Current CEO Kenichiro Yoshida had this to say on the news: "Hirai-san and I have been working on management reforms together since December 2013. While he will be retiring from both Chairman and our Board of Directors, we look forward to his continuing high-level support to Sony’s management that encompasses a breadth of diverse businesses."

Kaz reflected on his time at the company: "Since passing the baton of CEO to Yoshida-san last April, as Chairman of Sony, I have had the opportunity to both ensure a smooth transition and provide support to Sony’s management. I am confident that everyone at Sony is fully aligned under Yoshida-san’s strong leadership, and are ready to build an even brighter future for Sony. As such, I have decided to depart from Sony, which has been a part of my life for the past 35 years. I would like to extend my warmest gratitude to all our employees and stakeholders who have supported me throughout this journey."

Via Bloomberg and Reuters.

Thanks Adi, Diogo, DC, Lews and Waleed!

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