The CEO of Sony Mobile, Hiroki Totoki, silenced all rumors that had run amok about how the corporation was looking to sell off its now wholly owned subsidiary, Sony Mobile Communications Inc., due to unrecoverable losses.
In an interview, Mr. Totoki said that the Japanese tech giant will “never ever sell or exit the current mobile business.”
There were several different actions that started the rumor.
First, the rumors stemmed from the fact that the mobile business unit is the only business unit under Sony Corporation that suffered negative profits and is expected to be making a loss for the current operating year as well.
Having recently become a wholly owned subsidiary when Sony Corporation acquired Ericsson’s shares in 2012, the mobile division was the giant’s biggest failure in its annual report. Fiscal year 2014 reported that the business unit lost US$1.8 billion, with over US$1.4 billion attributable to impairment charges and restructuring costs from its sale of the VAIO PC unit.
Secondly, it could also be that Sony sold its PC unit VAIO to a Japanese investment firm in early 2014, speaking rumors that the Japanese conglomerate was looking to do away with its mobile unit in the same fashion.
Lastly, the announcement that Sony will be producing fewer phones to minimize losses and maximize profits also did not work well in the changing the perception of the public. It seemed like the corporation was focusing less and less on its mobile division, perhaps with a long term goal of disowning it.
Sony Flatly Denies Rumors
However, the CEO silenced all speculation on whether the mobile unit will be put on sale, also making an announcement that Sony will set up a smartphone factory in Thailand for more production capacity.
The company already owns a production site in Thailand, which has been indefinitely suspended after the nation’s disastrous floods in 2011. With the addition of this new factory which is expected to be working by early 2016, Sony is looking to once again mass produce its phones. The new factory is expected to produce several million units per year.
The news is expected to sit well with the company, especially since Sony hasn’t invested in a factory wholly devoted to mobile phones since the mid 1990s when a factory was jointly built in Beijing with three local Chinese business partners.
Investing in a new production facility with the sole purpose of handling mobile devices is indeed an optimistic sign for the company, something that will put the minds of its investors and followers a little more at ease.
Totoki put emphasis on Sony mobile products delivering superior user experience with the latest tech to capture its customers’ hearts.
As to improve the company’s financial performance, Totoki also said that the company was looking to cut its costs by 30% by the end of 2016, a lot of which is expected to be coming from its plan to layoff of one fifth of its workforce.
While things are definitely expected to be better this fiscal year which ends March 2016, Sony Mobile is still expecting to make an operating loss of about $320 million. Even though the CEO of Sony Mobile just came out saying that it will not be for sale, the executives leading the conglomerate might have other plans.
Top executives at Sony decided that they would be giving another year for the mobile division to turn its operating losses into profits, or at the very least break even. However, if the company happens to be still bleeding money by March 2017, the CEO of Sony Corporations Kazuo Hirai said that there is a possibility that they will be forced to resort to “other alternatives.”