Sony Corp’s turnaround over the past decade was built on hard-nosed accountability and the willingness to close troubled businesses. Indeed, Kenichiro Yoshida was elevated to chief executive officer because he acted as the company enforcer when he was finance chief.
However, Sony’s latest move has some investors wondering what happened to the old Yoshida.
The Tokyo-based company on Tuesday said that it would combine the struggling Xperia mobile business with its television, audio and camera operations into a single division.
Analysts are concerned that would make it harder for investors to see losses in the smartphone unit, which has long struggled against Apple Inc and Samsung Electronics Co.
The move comes after investors have complained for months that Yoshida should get rid of the Xperia business.
Shares plunged to a 17-month low last week after Jefferies’ Atul Goyal became the latest analyst to downgrade the company, citing worries over mobile losses.
The latest move would buy Yoshida more time, but analysts say it would not resolve the underlying problems.
“By hiding the mobile-related losses, they would take the pressure off from shareholders to shut the division down,” Amir Anvarzadeh, a market strategist at Asymmetric Advisors Pte, said in a note to clients. “Nevertheless, the losses are bound to rise further.”
Sony pushed back on the idea that it wants to hide Xperia losses.
It will disclose results for that division “for the foreseeable future,” spokesman Takashi Iida said.
The company would provide more details about its disclosure policy on April 26, when it reports the latest results.
“Through more cooperation among our divisions, we can create new value by better utilizing the combined assets and personnel in our electronics area,” Iida said.
“More interaction among employees will also lead to the development and growth of our staff,” Iida added.
The Xperia business has lost ￥101 billion (US$913 million) over the past four quarters, compared with operating profits of ￥82 billion at its TV and audio division over the same period, and ￥89 billion at its camera unit.
Yoshida has rebuffed pressure to get rid of the unit, saying that it is vital for pushing innovation, including 5G-related research.
The restructuring would create a new division called Electronics Products and Solutions, and is scheduled to go into effect on Monday next week.
That would mark the first major reporting overhaul since 2012, when previous head Kazuo Hirai split the consumer electronics unit into individual parts in a bid to boost transparency.
Sony shares yesterday closed little changed at ￥4,765 after the announcement.
The stock has dropped 11 percent this year, compared with a 7.7 percent gain for the broader TOPIX.
“Sony’s unwillingness to exit Smartphones is a disappointment and a strategic mistake, in our view,” Goyal wrote in his report last week.
The analyst cut his buy rating for the first time in five years and slashed his price target to ￥5,500 from ￥8,500.
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