Sony (6758) Corp. President Kazuo Hirai is
paying the price for trying to revive ailing TV and smartphone
sales, with more than $2 billion of market value lost today, as
his counterpart at Panasonic (6752) Corp. benefits from paring those
units as it struggles to compete.
Sony stock headed for the biggest drop in five years after
it unexpectedly lowered its full-year profit forecast by 40
percent on stalling television and digital camera demand and box
office flops. Panasonic doubled its earnings projection after
boosting battery sales, including a contract to supply Tesla
Motors Inc., and tapping rising demand for solar panels.
The leaders of Japan’s two largest consumer-electronics
companies took over last year amid record losses in TVs and
failures to develop hit products to compete with Samsung
Electronics Co. (005930) and Apple Inc. Hirai named Xperia smartphones as
a pillar of his recovery plan, while Kazuhiro Tsuga started to
exit plasma displays and cut handset operations.
“A year ago both of these companies needed radical
change,†said Yuuki Sakurai, chief executive officer of Fukoku
Capital Management Inc. “Sony stuck with TVs and they probably
need to get out that business. Panasonic had its back to the
wall and they had no choice but to change.â€
Sony fell 12 percent to 1,650 yen as of the trading break
in Tokyo, the biggest decline since October 2008. The stock was
cut to hold from buy by Jefferies LLC analyst Atul Goyal.
Panasonic rose 5.6 percent to 1,040 yen, the largest gain in
three months.
Division Losses
Sony’s net income will probably total 30 billion yen ($305
million) in the year ending in March 2014, the Tokyo-based
company said in a statement yesterday, cutting its August
projection for 50 billion yen in profit. The company also posted
a second-quarter loss.
Even with Japan’s weaker yen, five of Sony’s nine divisions
posted operating losses in the second quarter. The company,
which rejected investor Daniel Loeb’s push for a partial sale of
its entertainment assets, is recovering from a series of movie
flops that prompted criticism from the billionaire.
Sony’s film studio stumbled in the summer box-office season
that runs from May to early September. Big-budget tentpoles
“After Earth,†with Will Smith, and “White House Down,†with
Channing Tatum and Jamie Foxx, failed to connect with audiences.
Xperia Handset
Recent releases “Captain Phillips†and “Cloudy With a
Chance of Meatballs 2†have been well-received by audiences and
critics. Last month, subscription-streaming service Netflix Inc. (NFLX)
ordered a 13-episode series from Sony Pictures Television, by
the creators of the drama “Damages.â€
Sony cut the annual sales forecasts for camcorders, digital
cameras, personal computers and TVs while increasing its
projection for game consoles at it prepares to release the
flagship PlayStation 4 this month. The smartphone sales forecast
was unchanged at 42 million.
Sony’s net loss totaled 19.3 billion yen in the three
months ended Sept. 30, wider than the 15.5 billion-yen loss
booked a year earlier, the company said in a statement. That
missed the 14.8 billion-yen average profit of five analyst
estimates compiled by Bloomberg.
“The biggest concern is that even though they have the
currency working for them they still can’t turn a profit,†said
Yoshihiro Nakatani, a fund manager at Asahi Life Asset
Management Co. “Outside of their financial business, things
aren’t looking good.â€
Bravia TVs
The company needs to cut costs and undertake “more
aggressive reform†of its product portfolio and entertainment
business, Fitch Ratings said in a statement today. Sony’s BB-credit rating, which is three levels below investment grade, may
be downgraded, it said.
Sony is betting its Xperia Z1 handset, introduced in
September, will propel it to third place in the global
smartphone market, leaping from seventh and narrowing the gap
with Samsung and Apple. The phone features a 20.7-megapixel
camera and showcases Hirai’s strategy to boost internal
collaboration to make stronger products.
Sony is introducing the PS4 in the U.S. on Nov. 15, a week
before Microsoft Corp. releases its Xbox One. The Japanese
company expects sales of the PS4, priced for U.S. consumers at
$399, to reach 5 million units by March 31, compared with 3.55
million units sold in a similar period for the PS3.
In TVs, the company is promoting ultra-high-definition
Bravia sets after regaining the No. 3 position in the market,
according to DisplaySearch. The company expects to sell 14
million liquid-crystal-display TVs this year, down from an
earlier prediction for 15 million.
Tsuga Revamp
“The TV market is mostly saturated while smartphones have
eroded demand for digital cameras, camcorders and game
players,†said Koki Shiraishi, an analyst at SMBC Nikko
Securities Inc. in Tokyo.
Tsuga entered joint ventures and built on his predecessor’s
push into renewable energy. Net income will probably total 100
billion yen in the year ending in March 2014, the Osaka-based
company said in a statement yesterday. That compares with its
July projection of 50 billion yen.
The electronics maker agreed in September to sell 80
percent of its health-care unit to KKR Co. for about 165
billion yen. Panasonic needed expertise and money from outside
to expand in the medical-equipment market, it said in a Sept. 27
statement.
The company also will supply 2 billion lithium-ion battery
cells to Palo Alto, California-based Tesla in the four years
through 2017, Osaka-based company Panasonic said in a statement
yesterday.
The contract to supply Model S and Model X vehicles may add
about $7 billion in sales and cement Panasonic’s position as the
largest supplier of batteries for electric cars, said Ali Izadi-Najafabadi, a Bloomberg New Energy Finance analyst.
Panasonic also said yesterday it will buy 90 percent of
Istanbul, Turkey-based Viko, whose products include wiring
devices, for $460 million. Panasonic is aiming for 2 trillion
yen in sales for its housing-related businesses by 2018.
“It’s wise now for Panasonic to keep its head down, to
focus on reform while demands for its consumer goods remain
sluggish,†said Masahiko Ishino, an analyst at Advanced
Research Japan Co. in Tokyo.
To contact the reporters on this story:
Mariko Yasu in Tokyo at
myasu@bloomberg.net;
Grace Huang in Tokyo at
xhuang66@bloomberg.net
To contact the editor responsible for this story:
Michael Tighe at
mtighe4@bloomberg.net
Sony CEO Kazuo Hirai
Kiyoshi Ota/Bloomberg
Kazuo Hirai, chief executive officer of Sony Corp., tries out a Sony Xperia Z1 smartphone with the Sony DSC-QX100 smartphone attachable lens-style camera at the CEATEC Japan 2013 exhibition in Chiba.
Kazuo Hirai, chief executive officer of Sony Corp., tries out a Sony Xperia Z1 smartphone with the Sony DSC-QX100 smartphone attachable lens-style camera at the CEATEC Japan 2013 exhibition in Chiba. Photographer: Kiyoshi Ota/Bloomberg
Sony’s Showroom
Akio Kon/Bloomberg
The Sony Corp. logo is displayed outside the company’s showroom in Tokyo.
The Sony Corp. logo is displayed outside the company’s showroom in Tokyo. Photographer: Akio Kon/Bloomberg
Panasonic Presdient Kazuhiro Tsuga
Tomohiro Ohsumi/Bloomberg
Kazuhiro Tsuga, president of Panasonic Corp., started to exit plasma displays and cut handset operations.
Kazuhiro Tsuga, president of Panasonic Corp., started to exit plasma displays and cut handset operations. Photographer: Tomohiro Ohsumi/Bloomberg
Sony Slumps After Hirai Cuts Forecast as Tsuga Revamps Panasonic
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