Wed, Sep 02, 2009 - Page 12 News List

Sony to sell factory to Hon Hai

OUTSOURCING Hon Hai will continue the production of Sony’s Bravia TVs at the Tijuana facility and retain all 3,300 of the workers. Sony will keep a 10 percent stake

Sony Corp will sell 90 percent of its biggest North American television-manufacturing site as it reorganizes its unprofitable TV business by outsourcing more production.

Hon Hai Precision Industry Co (鴻海精密) will buy the stake in a liquid-crystal-display TV unit based in Tijuana, Mexico, and the unit’s manufacturing assets, Tokyo-based Sony said yesterday.

Hon Hai, which yesterday reported its first profit growth in more than a year, will continue production of Bravia TVs and retain all 3,300 of the factory’s workers. Sony will keep the balance of 10 percent of the unit.

The sale signals that Sony — which is cutting 16,000 jobs and has shut eight factories to revive its profitability as it heads into its first consecutive annual losses since its listing in 1958 — may eventually stop making TVs, said Kota Ezawa, an analyst at Citigroup Inc in Tokyo.

“The Mexico site is Sony’s main TV production base, and selling that suggests the company may be selling other smaller sites,” Ezawa said by phone.

Sony gained 0.2 percent to close at ¥2,520 (US$27) in Tokyo trading, while the benchmark Nikkei 225 Stock Average added 0.4 percent.

The company’s Consumer Products and Devices Group, which makes TVs, cameras and semiconductors, posted a ¥2 billion loss in the quarter ended June 30, compared with a profit of ¥36.1 billion a year earlier as sales slumped 27 percent.

The sale is the first of a TV factory under Sony’s plan to reduce assets and outsource more of its production, Mami Imada, a spokeswoman for Sony in Tokyo, said by phone. She declined to disclose financial terms of the agreement.

Hon Hai, the world’s largest contract maker of electronics, gained 6.8 percent to close at NT$118.5 on the Taipei Stock Exchange, the highest level since Aug. 29 last year. The company on Monday posted its first profit increase in five quarters, beating analysts’ estimates. Second-quarter net income rose 27 percent to NT$15.1 billion (US$460 million) from a year earlier.

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