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Disappointing smartphone sales hit Sony as it warns of pounds 1.3bn loss and axes payout: Company drops dividend for first time in 50 years Job cuts likely as strategy to expand sector revised(Guardian (UK) Via Acquire Media NewsEdge) Sony is axing its annual payout to shareholders, for the first time in its 56-year history as a public company, after it warned that troubles at its smartphone division will push it into an annual loss of more than yen 230bn (pounds 1.3bn). The Japanese electronics company is now forecasting a deep loss in the financial year to March 2015, compared with a forecast of a yen 40bn operating profit. "This is the first time we've not paid a dividend and we feel that responsibility as management very heavily," said chief executive Kazuo Hirai. He pledged Sony would restart dividends as soon as possible. Hirai said Sony had intended to expand the mobile division but was now revising its strategy. He outlined plans to cut 15% of the staff in the division in the coming months. In July Sony had cut its forecast for smartphone sales for the year from 50m to 43m, only slightly ahead of the 42m it shipped last year. Hirai insisted, however, that the mobile business would remain as one of its core electronics businesses, along with gaming and cameras. But the company would now focus on fewer geographical regions and the premium end of the smartphone business. The profits warning came after Sony looked at its performance in the fiercely competitive smartphone market, where Apple and Samsung dominate both revenues and profits, and smaller players including Sony, LG and HTC are coming under pressure from Chinese vendors such as Huawei, ZTE and Xiaomi. Hirai said Sony had failed to keep up with changes in the industry. "The Chinese smartphone manufacturers have made great strides and are expanding outside their own market, and this has caused a shift in the pricing," he said. "Meanwhile, Apple and other manufacturers are launching strong, innovative products. The changes are very rapid and dramatic." Francisco Jeronimo, smartphones analyst at the research company IDC, said it would be unwise for Sony to withdraw from the US - although it is one of its weakest markets in sales terms - because it needs to sell other products and services there. "They have a very strong relationship with mobile carriers in Europe, and they have been performing well," said Jeronimo. "But these writedowns show that making money at the high end is possible maybe only for Apple and Samsung." The two companies dominate the segment for phones costing more than pounds 360, though the average price of smartphones is falling worldwide as cheap phones take off in countries such as India and China. The cut in forecasts is the sixth under Hirai, who took his post in 2012 promising to pull the firm's troubled electronics division into the black by focusing on its mobile, gaming and camera units, selling off its PC business, and shifting the TV business into a subsidiary company. The forecast revision is also an embarrassment for the new chief financial officer, Kenichiro Yoshida, who assumed his post on 1 April promising Sony would be more realistic about its outlook. Yoshida had warned in July that Sony could write down losses on its mobile unit for this business year. At the time, Sony cut its profit outlook for its smartphone business to zero but stuck to its full-year forecast. Sales of Sony's high-end Xperia mobile devices have been hit by a lack of relationships with carriers in the crucial US market, where its smartphones are so far only available on fourth-ranked carrier T-Mobile US, as well as in China, where local makers remain dominant. 43m Captions: Sony's revised forecast for smartphone sales for the year, which was cut from 50m, and is only slightly more than last year's 42m Kazuo Hirai, Sony's chief executive, insists the company's mobile division will remain as one of its core electronics businesses but says it will concentrate on the premium end of the market Photograph: Tomohiro Ohsumi/Getty (c) 2014 Guardian Newspapers Limited. |