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Will Sony Be Split Up & Sold?

By David Richards | Tuesday | 28/01/2014

Will Sony survive as a brand or will some other Corporation step in and buy the struggling Japanese Company who was rated as "junk" by ratings agency Moody's this week.

Several Chinese Companies would love to get their hands on the Sony brand name in the same way that they have done with the likes of Grundig, Bush, Blaupunkt and the former IBM Think Pad notebook that is now manufactured by Chinese Company Lenovo.

The problem for Sony is that consumers have stopped buying their products because they are not seen as being trendy or smart anymore, at the same time the management team at Sony have been unable to deliver any "must have" product similar to what Apple and Samsung deliver.   

Their Bravia TV sales are slumping and they will most likely dump their PC product range later this year. The only bright side is the smartphone and digital camera product range and even in those markets the Company is struggling to compete.  

The Company is under pressure both in Australia and globally due to their inability to compete up against several smart consumer electronics Companies. 

The display panels in the bulk of their Bravia TV's are cheap third party components that come with a Bravia sticker, their PC's are designed by a European design Company and manufactured in China. 

This week Moody's Investors Service cut its credit rating on Sony to junk status in the latest setback for the Japanese tech giant that despite some success with their PlayStation 4 have had a poor last quarter.

Last year in Australia Sony dumped their CEO Carl Rose and CFO Nicholas Foster after a 12 month investigation of Sony Australia by the Australian Taxation Office this resulted in the Company being hit $21M in penalties and $32M in back taxes.

In Australia Sony public relations staff is refusing interviews on the state of the Company, in the past PR staff at Sony Australia have black banned journalists for what they deem "negative stories" about the Australian subsidiary that regularly changes marketing, sales and administration staff.

Last year the Company dumped their entire finance department with all financial administration now outsourced to Singapore. 

Sales at the Australian subsidiary fell $153M from $666M in 2012 to $513M in 2013.

Moody's has painted a grim assessment of the lengthy road ahead for the turnaround of Japan's most iconic tech brands, saying big cost cuts and new product launches have so far failed to fill the void left by eroding sales of television, personal computers and digital cameras.

In October 2013 cut its annual sales forecast for Vaio computers to 5.8 million units from 6.2 million and said their PC business needed fundamental reform. They also cut the projected sales outlook for Bravia TV's  by 6.7 percent and said it expected to sell 14 million liquid-crystal display sets instead of its previous projection of 15 million units.

Sony's TV business has lost money for nine straight years and their share of global TV sales fell to 7.5 percent in the third quarter last year from 8.1 percent the previous quarter, according to NPD DisplaySearch. 

The bright side for Sony is their Xperia smartphones and QX lens cameras.

What is uncertain is how long Sony can maintain its competitiveness with so many other rivals rolling out various products that appeal to consumers over a Sony branded product. 

"Moody's downgrading Sony before its earnings result at this timing makes investors more worried about Sony," said Mana Nakazora, the chief credit analyst in Tokyo at BNP Paribas SA. "Investors have thought Sony was moving toward recovery but the downgrade by Moody's will make people think Sony is still struggling."

 Kazuo Hirai President and CEO  of Sony has committed to continue making TVs, and Sony is now introducing ultra-high definition models that cost as much as $25,000 in an effort to compete up against Samsung and LG.

Hirai also is focusing on the new PlayStation 4 game console released last year and Xperia smartphone shipments.

While the PS4 has posted record sales, Japan's biggest electronics exporter is also being hit in its camera and camcorder businesses, as mobile devices from Samsung and Apple with more sophisticated lenses and sensors eat into demand.

In Australia some retailers are now cutting back on stocking Sony products and what is not known is whether Sony products are on their buy list for 2014. Globally Sony has changed managment shut plants sacked tens of thousands of people and still they are struggling, this is not a good position to be in when the likes of Samsung, Apple, Google and LG are cranking out new products backed by slick marketing. 

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