Kazuo Hirai took over as Sony’s CEO two years ago promising big changes and a return to profitability. Now some are calling for his resignation and he is facing increasing pressure from activist investors to spin off more businesses. Sony has slashed its earnings guidance for the third time this year. Investors are furious and the stock is down nearly 2 percent this morning. Sony now expects a 130 billion yen loss ($1.3 billion). Sony’s market cap once nearly $70 billion now sits at around $20 billion.
Hirai recently brokered a deal to sell off Sony’s VAIO PC unit, but it appears this decision will come at some cost. The company said it would have to write down a further 30 billion yen ($300 million) on its Vaio PC unit, reflecting a sharp drop in sales as consumers shunned the brand following Sony’s decision in February to get out of the business. This was increased Sony’s restructuring costs for the year, which will now reach 70 billion yen.
Strong sales of the Playstation 4 console offer one bright spot, but development costs mean it could take at least another year to turn a profit. It appears the low cost of the console and aggressive international push of the PS4 has come at a price.
An analyst commented:
“To be honest, I really wonder if he’s got a grip on what’s going on with all his businesses,” said Yasuo Sakuma, a portfolio manager at Bayview Asset Management in Tokyo, who does not own Sony shares. “Cutting forecasts at this time; are they trying to hide something or have they lost it?”
Another Japanese continues company Panasonic continues to do well while Sony struggles. Sony is also being dominated by Samsung in many areas. If Sony falls any further is may become a good target for an acquisition.