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Sony to “explore potential alliances” in “highly volatile” mobile business

Sony revealed its mid-term corporate strategy for the next three years, and mobile is singled out as one of the areas where Sony will focus on minimizing risks, rather than creating growth or profits.
By
February 18, 2015
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Sony revealed its mid-term corporate strategy for the next three years, and mobile is singled out as one of the areas where Sony will focus on minimizing risks, rather than creating growth or profits.

For the fiscal years 2015-2017, Sony wants to return to a healthy profit, by focusing on “growth drivers” including the PlayStation platform, image sensors for mobile devices and cameras, and entertainment. These are all business where Sony will implement “growth measures and engage in aggressive capital investment” with the goal of expanding both revenues and profits.

A second group of activities mentioned in the strategy is “stable profit generators,” businesses where Sony doesn’t foresee growth, but can still deliver “steady profit and positive cash flow.” In other words, these are units that won’t bring Sony a lot of money, but won’t cause losses either.

Finally, Sony mentioned Mobile Communications and TV as “areas focusing on volatility management.” Here, Sony will focus on curtailing risks, cutting costs, and dealing with commoditization in a “challenging competitive landscape.” The company hinted that it will invest more parsimoniously in mobile and TV and that it’s even considering partnerships or spinoffs:

“By carefully selecting the territories and product areas it targets, Sony will seek to limit its capital investment and establish a business structure capable of securing stable profits. The Company will also continue to explore potential alliances with other companies in these areas, in response to changes in the business landscape.”

And

“Sony also intends to move forward with preparations for splitting out other business units thereafter”

The company didn’t specify what business units it considers “splitting,” but the term could mean two things here: Sony could spin out mobile as a wholly owned subsidiary, in order to give it more autonomy and to reduce costs. Or, it could sell it off, like it did with the Vaio laptop business, which it unloaded to a group of investors in 2014.

Over the past couple of years, Sony touted mobile as a pillar of its return to profitability and future growth. In fact, when Vaio was offloaded in February 2014, a better focus on mobile was offered as one of the key reasons for the divestment. But things have changed, and CFO Kenichiro Yoshida has made it clear in the past that Sony has no “sacred cows.” Yoshida has impressed investors with hard, no-nonsense measures, including the write-off of most of the value Sony put in the mobile unit. As such, we shouldn’t really be surprised if Sony decides to take a drastic measure sooner or later.

On the product front, two weeks ahead of MWC, there’s no word of any Sony event at the show, and it’s increasingly clear we won’t see the Xperia Z4 in Barcelona.