Sony Giving Up on Electronics?
Sony’s electronics division isn’t doing so hot. In fact it is apparently losing money on nearly every gadget it sells. If you’re surprised at this, don’t worry, you aren’t alone. You may even be asking yourself what else they do. They have motion pictures and music but those endeavors have only contributed $7 billion to the company’s bottom line over the last decade. The electronics division has managed to lose a cumulative $8.5 billion in that time. So where do their profits come from? Unbeknownst to most of us in the west, Sony has a financial arm as well that deals in insurance and online banking that sees solid success in Japan. In the last year alone this division has been responsible for 63% of Sony’s total operating profit. It’s no wonder why when Daniel S. Loeb, an American investor and manager of the hedge fund Third Point, pressures Sony to revive it’s failing electronics division many analysts are wondering why. The company’s foray into markets like cell phones, TVs, cameras and game consoles have seen some successes but are ultimately struggling to stay afloat in a sea of stronger companies.
There is a danger in continuing to focus on this failing arm as a lack of managerial attention could start to harm the financial and entertainment divisions. Sony Financial Holdings is already starting to under-perform its peers on the Tokyo Stock Exchange.
The opinion of the outside world seems to be that Sony needs to split these divisions into three separate and independent companies.
Some are hopeful that recent successes in the electronics arm may suggest a revival of sorts and to that point, only time will tell. The fact remains that Sony’s insurance division is the company’s bread winner. The question is how long Sony will continue to throw good money after bad.