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Sony will spin off its audio and video business as it searches for profitablity

Sony will spin off its audio and video business as it searches for profitablity


The 'One Sony' rallying cry sounds increasingly hollow

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When Kazuo Hirai took over as CEO of Sony back in 2012, he laid out a vision for the company that would reorganize its sprawling business into "One Sony." But exactly one year ago this month, Hirai decided to spin off the company's TV business and sell its Vaio personal computer unit. Today he continued breaking Sony apart, announcing that it would spin off its audio and video business into a wholly owned subsidiary. And he told investors that the company had to consider the possibility of selling off its smartphone and TV business entirely, leaving it to focus on its more profitable units: media, gaming, and selling imaging sensors to Apple.

Entertainment, Playstation and image sensors are areas of focus

The goal for Sony is to return to profitability after nearly a decade of losses, and Hirai believes that can be achieved by slimming down the core of what Sony is building. This will allow it to focus on growing the profitable parts, namely the PlayStation gaming and image sensor unit, which makes components for widely successful devices like the iPhone.

Back in 2013, Sony rejected a call from activist investor Third Point Partners to spin off its entertainment division. On today's call, Hirai told investors that media would be one of the company's top three priorities, alongside games and image sensors, with TVs and smartphone sitting below that.

Projecting a 25 fold increase in profit over three years

The company tried to provide some encouraging guidance, updating its projected earnings from a loss to an operating profit for this fiscal year. Hirai also said that the spinoffs will help the company grow to an annual profit of 500 billion yen by the end of 2018, a massive jump from the 20 billion yen it is hoping to reach by this March.