Veering away from smartphone and TV sales is Sony Corp, who have decided to set their sights on business structured on higher-margin products. That includes image sensors, videogames and entertainment. And they aim to bring it in with a bang- the company forecast its highest earnings, operating profit to reach $4.2 billion, ending March 2018, also targeting a return-on- equity surge of about 10% and aiming to resuscitate dividend payments from next year.
According to Bloomberg, these are highest profits ever since more than a decade ago in 1998, when ” income was fueled by MiniDisc players and the first “Men in Black” movie.”
Sony already faces cut throat competition from cheaper Asian rivals, and bigwigs like Samsung and Apple. Heeding investors and analysts, Sony has finally decided to cut it’s losses and focus on smaller-scale but more profitable areas where it has an edge- camera sensors for smartphones, the PlayStation console and video games, and its film studio.
Profits had seen a boost after the company switched to CMOS tech for camera sensors, generating better quality images in low light conditions. In a conference with analysts to discuss the company’s corporate strategy, CEO Kazuo Hirai emphasized company reorientation that aimed at profitability over volume growth. Quizzed over the TV, computer and phone units, Hirai said they would not “rule out considering an exit strategy”, that translates into selling these floundering businesses or finding partners.
Last year, Sony sold its computer division and modified its television group into a separate unit laying off thousands of people working for the Tokyo based giant. The news came after it was visible that Sony is headed towards its sixth net loss in the past seven years.
Since Hirai appointed Kenichiro Yoshida as the CFO in late 2013, shares have seen a jump of more than 80 percent over the past year, winning back much needed credibility. The CFO will add to the role of executive deputy president, while Vice Chairman Masaru Kato, medical business President Tadashi Saito and head of HR Kunitaka Fujita will resign after the annual shareholder meeting in June.
To go back to revenue flow days of the Sony Walkman, it will take a lot of grit and strength. How the restructuring and the business shifts affect Sony’s popularity and credibility is time’s tale to tell, but instead of sticking on to loss-making businesses, Sony seems to be doing good by shifting focus to profit-generating avenues. We are seeing Samsung’s miserable show with smartphones, Sony probably did have a look at that too.